International Opportunities for Asian MVNOs and Service Providers

Opportunities for Asian Service Providers in Foreign Markets

By Michael Dargue and William Wadsworth

MVNO and OTT voice applications create significant opportunity for Asian service providers to

expand beyond their home markets. Many nations, particularly in the Western world, now have a

considerable Asian population. MVNOs targeting ethnic groups have thus far proved popular, and

despite some Asian operators already moving to capture specific markets of foreign nationals,

competition in this space is still relatively low, with many further markets available to capture.

October 2012

Cartesian: Opportunities for Asian Service Providers in Foreign Markets

Copyright © 2014 The Management Network Group, Inc. d/b/a Cartesian. All rights reserved. 1

The Future of Asian Mobile Markets

The current state and outlook of the Asian mobile market varies greatly between different countries, but in

general, Asian operators are seeing opportunities to grow revenues within their home nation becoming

increasingly limited, as competition levels to erode ARPU and as penetration-level growth begins to slow.

Despite the revenue potential of new technologies such as high-speed mobile broadband, some Asian

operators have concluded that they will need to look beyond their traditional home market in order to

maintain the high levels of growth they have previously enjoyed.1

The Developing Global MVNO Market

While the MVNO model has not had a significant impact in many Asian countries to date, other nations’

mobile markets are now showing up to 10-20% virtual operator share. The success of the MVNO sector in

these countries has been driven by a combination of favourable regulatory environments and innovative

market propositions.

1 Ovum, Cartesian

78%

85%90%

94%97%88%

95%

100%103% 105%

108%112%

116%119% 122%

113% 115% 117% 118% 119%

131%135% 137% 138% 139%

50%

70%

90%

110%

130%

150%

2012 2013 2014 2015 2016

China India Japan South Korea Malaysia

11 10 9 9 8 8 8 8

6663

57 55 54 53 52 51

3 2 2 2 2 2 2 2

36 3633 32 31 30 30 29

18 17 16 16 15 15 15 14

0

10

20

30

40

50

60

70

2009 2010 2011 2012 2013 2014 2015 2016

Figure 1: Mobile (Voice and Data Services) Penetration Forecast for Selected Asian Markets 1

Figure 2: Mobile ARPU (Voice and Data Services)

Forecast for Selected Asian Markets ($ per Month) 1



Figure 3: Total MVNO Market Share in Selected Countries 2

Accounting for 11% of MVNOs worldwide, one of the most prevalent types of MVNO are the Ethnic MVNOs,

which serve migrant populations3. Services which Ethnic MVNOs are able to offer to their target segment

include: cheaper voice and messaging services to their home country; customer service in their mother

tongue; tailored value-add services such as native language voicemail; “infotainment” services from their

home nation; cheap communication services when returning to their home country; and remittance services

to send money home securely and easily. In addition, through operating MVNOs abroad, local providers are

able to offer better services for their home market – such as providing affordable communication links to

the foreign market.

For example, an operator in the former Dutch colony Suriname, Telesur, launched an MVNO in The

Netherlands to help connect people in the two countries. Telesur offers local rates from, in, and between

the Netherlands and Suriname by means of a multi-country SIM which provides subscribers with a local

profile in both Suriname and The Netherlands. With customer care and content provided in both languages,

Telesur has achieved over 20% market penetration in the target group, with substantially higher ARPU and

lower churn than average prepaid mobile operators.

The Asian Opportunity

With over 77 million Asian-born people living abroad, Asia has produced a larger global migrant population

than any other single continent4. Many of the largest destination nations, are countries where smartphone

2 Cartesian, Nereo, company websites, press releases

3 Wireless Intelligence, Cartesian

4 Migration Policy Institute calculations of the World Bank Development Prospects Group's Bilateral Migration Matrix data



adoption is high and where the MVNO model is popular (see Figure 2) – such as the USA, the UK, Germany

and France.

Figure 4: Distribution of Asian-born People across the World’s 10 Largest Immigration Destinations 5

Some Asian operators have already launched offshore MVNOs to capture such opportunities (see Figure 5),

but there are many Asian communities around the world that are yet to be targeted.

Figure 5: Examples of Asian Operator-owned MVNOs Which Have Already Launched 6

5 Development Research Centre on Migration, Globalisation and Poverty

6 Cartesian, company websites, press releases

0%

20%

40%

60%

80%

100%

Spain

UK

India

Canada

Saudi Arabia

France

Ukraine

Germany

Russia

USA

Destination Nations:



Key Considerations for Entrants

Ethnic-focussed service providers will find it hard to compete on price alone due to volume limitations so

should focus on the added value they can offer their subscribers, such as connectivity to their home country,

language support, and specific appealing content and features.

Many Asian operators have a brand which is well trusted by the people of their country, but even with this

asset, a very strategic approach to keeping customer acquisition costs low would be needed in order to

make the venture profitable.

Entrants need to understand the justification for launch. A key question is whether the primary goal is to

capture overseas revenues, or deliver revenue uplift to the core domestic business. This in turn will influence

the optimum entry strategy: whether full MVNO, light MVNO or OTT voice application.

Partner selection and assessment is also of key importance. Entrants pursuing the MVNO route will need

significant support from the host MNO, requiring a collaborative and viable pitch and proposition to

demonstrate the benefits they can bring. OTT voice offerings may also be developed in collaboration with a

partner, reducing time to market, or built in-house.

Those seeking international expansion opportunities will have to consider their entry strategy carefully.

There is wide variation in local market characteristics across countries of interest; business models,

propositions, brand and customer segmentation will all have to be analysed and tailored.

Cartesian Experience and Support

Cartesian has deep experience in assisting MNOs, MVNOs and regulators achieve their objectives.

We have worked on over 40 MVNO engagements globally including supporting Asian MNOs develop and

execute their international growth strategies. We can support across a number of areas, including:

Strategy and business case support, including detailed cost and revenue modelling

Negotiation support for contracts and commercial terms

Securing funding

Vendor and partner identification, evaluation and selection

Assessment of MVNO policy, regulation and market impact

Cartesian is a specialist consulting firm of industry experts, focused exclusively on the communications,

technology and digital media sector. For over 20 years, Cartesian has advised clients in strategy

development and assisted them in execution against their goals. Our unique portfolio of professional

services and managed solutions are tailored to the specific challenges faced by executives in these fast-

moving industries. Combining strategic thinking and practical experience, we deliver superior results.

www.cartesian.com

For further information, please contact us at [email protected]

Business

International Opportunities for Asian MVNOs and Service Providers