India’s converging telecom and changing digital landscape is creating opportunities for entities like DTH operators, banks and big media and content companies to enter into Mobile Virtual Network Operators (MVNO) business, according to consulting firm Deloitte.
“In addition to the diversified and segmented nature of India market, we’re also witnessing converging telecom and changing digital landscape similar to some mature markets.
This means there is an opportunity for newer entities across key industry verticals, for example, DTH operators, Banking, Over-The-Top (OTT) players and big media and content companies to enter into the MVNO business,” Neeraj Jain, Partner, Deloitte India told PTI.
Earlier this year, Telecom Department released licence guidelines for virtual network operators, opening the door for new class of players who will act like retailers for telecom service providers.
The Virtual Network Operators will be entities providing telecom services like mobile, landline and internet but only as retailer for full-fledged telecom operators such as BSNL, MTNL and Airtel.
The entry of such operators is expected to push down cost of providing telecom services for companies and even give them room for cutting down tariffs.
“Looking from the prepaid customer base, new MVNO’s Average Revenue Per User (ARPU) could be around Rs 200 per month…this largely depends on the quality of service and the differentiation MVNOs offers. If MVNOs focus on pure play voice services and focus on price as differentiator then ARPU could be around Rs 150 per month,” Jain said.
Based on firm Deloitte’s estimates, MVNOs could capture 60 to 80 million subscribers with topline revenue between Rs 1,000-1,300 crore per month over the next 2-3 year timeframe.
Deloitte’s recent report titled ‘MVNO 2.0 – Opportunity for entities aspiring to be part of Indian telecom ecosystem’, has pointed out that the participation in the last three spectrum auctions has resulted in debt in the books of mobile network operators or MNOs.
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“With growing debt, managing the tightrope walk of Return-On-Investment has become a major challenge for MNOs. To overcome the challenge, MNOs should look at MVNOs as partners and choose to work with them by opening up some under-serviced customer segments, demography wise, and some underutilised networks capacities and assets, geography wise.
“With this thought process, entry of MVNOs could be seen as an opportunity for MNOs to monetise their underserviced segments and underutilised assets,” the report said.
The report further said that opportunities for MVNO players in India include tapping demand for bespoke products in highly-penetrated markets, subscriber acquisition in rural markets and Tier 2/3 cities which are upcoming hubs of business and academic activities.
The report also flags low call rates, maintaining consistent Quality of Service, and limited spectrum holding as key challenges before MVNOs.
“Lower and fragmented spectrum holding by MNOs could make entry of MVNOs in certain regions unviable and may impact service quality,” the report added.