business plan mvno project final presentation
TRANSCRIPT
MVNO BusinessBusiness Plan
Agenda• MVNO fundamentals
– About MVNO– Wireless service delivery chain– MVNO Business models– Why MVNO
• Indian market analysis– PEST– Porter five forces
• Analyzing MVNO opportunity in India– Our MVNO business model– Our business strategy– MVNO opportunity framework– MVNO marketing strategy – targeting, positioning– MVNO strategy implementation – price, product,
place and promotion – Financial analysis– MVNO business risks
MVNO FUNDAMENTALS
About MVNO
• A MVNO is a type of mobile operator which offers voice and data services without owning any part of the network infrastructure.
• MVNO typically "rent" both the access network and the transport network - the mobile spectrum, from traditional mobile network operators and provide services under their own brand name.
Wireless service delivery chain
user
MVNO Business models
MNO MVNO
MVNO
MVNO
MVNE
MNO
MNO
MNO BRANDS
MVNE
Why MVNO
Why MVNO
INDIAN MARKET ANALYSIS
PEST
Porter’s 5 forces
Threat from New Entrants: High•Growing subscribers base•Presence of infrastructure• Numerous foreign players are interested to enter. Increase in FDI will allow foreign players
Buyer Power: High•Buyers demanding greater variety at lower prices.
Threat of substitution: Low•No strong demand for fixed line•Little awareness about VOIP applications
Supplier Power: Moderate•Handset suppliers have strong brands e.g. Nokia, Samsung, LG• Large MVNO are able to push cheaper brands
Competitive Rivalry: High•Margins are small around 4%• High competition is driving down voice ARPU.
ANALYZING MVNO OPPORTUNITY IN
INDIA
Our MVNO business model
MNO MVNO
MVNO
MVNO
MVNE
MNO
MNO
MNO BRANDS
MVNE
MVNO Business Strategy
• Low CAPEX and OPEX for first few years.
• Low fixed expense and high variable expenses.
• Align with MVNE for infrastructure needs.
• Buy cheap handsets from supplier such as Olive.
• Sell handset at slightly higher price to cover acquisition cost.
• Prevent cannibalization of MNO customers.
MVNO opportunity framework
MVNO Marketing Strategy- targeting
TARGET SEGMENT
MVNO OFFER
Retailer MVNO Low income and credit • Simple prepaid • Focus on voice and SMS
Cable MVNO Mass market (cable households)
• Quadruple play bundle• Focus on convergent offer
3G centric MVNO Heavy users of mobile data
• Voice and data bundles• Focus on premium content (music, gaming, sports, etc)
Music centric MVNO Music fans • Voice and data bundles• Focus on competitive music OTA downloads
Enterprise focussed MVNO
Medium to large enterprise
• Corporate packages• Focus on enterprise applications
Demographic focussed MVNO
Focussing on unique needs of demographic
• Simple flat rate• Simple pricing plans
MVNO Marketing Strategy
TARGET CUSTOMER
Urban youth: Distinct mobile needs
• More and longer out-bound voice calls
• Big calling circles for both making and receiving calls
• Large users of SMS
• Both the earliest adopters and highest users of value-added services
• Higher usage for both voice and SMS at weekends
• High demand for upgrades
• Price sensitive
MVNO Marketing Strategy - positioning
PRICE
LOW HIGH
VALUE ADDITIONSNO FRILLS
VALUE ADDITIONSNO FRILLS
MVNO Marketing Strategy
POSITIONING
VALUE ADDITIONS
• Free in-network calling (CUG)
• Personalized customer care
• QWERTY handset at low prices .
NO FRILLS
• Low prices & basic services
• Simple rate plans.
• Easy to understand
MVNO Strategy Implementation• FLAT PRICING - 8.9$ (per month)
PrepaidVoice
•First 300 mins in
network outgoing
free.•Free incoming•After 300 mins
call charges 0.025
$/min.•Out of network
call charge – 0.04$•One month
validity
PrepaidData
• Free data plan
up to 100 MB•After 100Mb
0.06$/Mb
Postpaid Voice
•First 300 mins
in network
outgoing free.•Free incoming•After 300 mins
call charges
0.018 $/min.•Out of network
call charge –
0.04$
Postpaid Data
• Free data plan
up to 100 MB•After 100Mb –
0.05$/Mb
MVNO Marketing Strategy
PRODUCT
Vodafone Campus Pack Talk and SMS @ 0.002$
Buy the Vodafone Campus Pack worth $2.2 with 2 years validity
• Calls to 5 local Vodafone numbers @ 0.002$ / min
• Local SMS @ 0.002$
• Calls to local Vodafone mobile phones @ 0.01$ / min
• Calls to other local mobile phones @ 0.02$ / min
• STD calls @ 0.03$ / min
• Existing Campus Pack subscribers can also opt for the new tariff by doing a recharge of $1
MVNO Marketing Strategy
PRODUCT
Data plan includes
• Internet for emails, surfing
• Chatting applications within network (CUG).
• SMS
• Campus applications – Calendar application for class and event schedules, announcements
MVNO Strategy Implementation• PLACE
– Initially the service is rolled out in two Indian metros
• Delhi – Mobile customer base 12 millions
• Mumbai – Mobile customer base 13 millions
– The channels we are going to use for distribution will be:
• Retail stores (Big Bazaar)
• Small shops
• Bank ATM
• Self service through SMS recharging
MVNO Strategy Implementation• PROMOTION
– Promotion at places where youth shop such as
• Shopping malls
• Movies theater
• School campuses
– Imaginative, eye-catching advertising & PR
MVNO Financial analysis
• ARPU analysis
Postpaid Voice
Average call rate/min (within 300 mins) = 0.013$
Average call rate/min (after 300 mins) = 0.018$
Assuming that 90% customers stay within 300 mins and 10% customers talk more than 300 mins
Average call rate/min = 0.9*0.013+0.1*0.018=0.0135$
MVNO Financial analysis
• ARPU analysis
Postpaid Data
Average rate/Mb (within 100 Mb) = 0.033$
Average rate/Mb (after 100 Mb) = 0.05$
Assuming that 95% customers stay within 100Mb limit and 5% customers exceed more than 100 Mb limit
Average $/Mb = 0.95*0.033+0.05*0.05=0.03385$
MVNO Financial analysis
• ARPU analysis
Prepaid Voice
Average call rate/min (within 300 mins) = 0.013$
Average call rate/min (after 300 mins) = 0.025$
Assuming that 90% customers stay within 300 mins and 10% customers talk more than 300 mins
Average revenue/min = 0.9*0.013+0.1*0.025=0.0142$
MVNO Financial analysis
• ARPU analysis
Prepaid Data
Average rate/Mb (within 100 Mb) = 0.033$
Average rate/Mb (after 100 Mb) = 0.06$
Assuming that 95% customers stay within 100Mb limit and 5% customers exceed more than 100 Mb limit
Average $/Mb = 0.95*0.033+0.05*0.06=0.03435$
MVNO Financial analysis
• ARPU analysis (per month)
– Assuming 75% postpaid customers and 25% prepaid customers
ARPU = 0.75*(0.0135*300+0.03385*100) + 0.25*(0.0142*300+0.03435*100)
=7.5$ => 90$ (per year)
VOICE
(Per min)
DATA
(per Mb)
POSTPAID 0.0135$ 0.03385$
PREPAID 0.0142$ 0.03435$
MVNO Financial analysis
– Other analysis (Click link)
Microsoft Excel Worksheet
MVNO Financial analysis
Lifetime value
- AC – Acquisition cost – 11.0$
- r – Average retention rate – 93%
- i – Interest rate – 8%
- M – Margin customer generates in year – 26.7$
- LTV = 167$
1
MLTV AC
r i
MVNO Business Risks
OPERATIONAL RISKS
• Wholesale capacity pricing policy
• Concern about subscriber data
REGULATORY RISKS
• Foreign direct investment in MVNO
• Limits on MNO investing in MVNO
• Tax structure on profits
MVNO Business Risks
OTHER BUSINESS RISKS
• Mobile number portability
• Higher churn rate -> Higher customer acquisition costs.
• Negotiation with education institutions to offer VAS.
MVNO Business OpportunitiesFuture business opportunities
• Fully functional MVNO in 5-10 years.
• Provide differentiated mobile value added services (m-VAS)
• Future business opportunities – Enterprise MVNO
THANK YOU QUESTIONS?