MVNOs in the Brazilian Mobile Market - 123seminarsonly.com · MVNO Business in Brazil will account...
Transcript of MVNOs in the Brazilian Mobile Market - 123seminarsonly.com · MVNO Business in Brazil will account...
BRA-200410
MVNOs in the Brazilian Mobile Market
Exploring the opportunity
This document has been created by NEREO BUSINESS CONSULTANTS. It is not complete unless supported by the underlying detailed analyses and oral presentation.
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MVNO Regulationin Brazil
INTRODUCTIONPurpose of the Document
NEREO presents the following document to highlight the MVNO opportunity presented by the current market and regulatory situation in Brazil
• We are Strategy and Investment advisors in the TMT and Renewable Energy sector
• We have assisted clients in launching over 20 MVNOs in more than 12 countries
• Currently, in Latin America
– We are developing the 1st Full-MVNO in Central America
– We are assisting one of the prestigious operators, with presence across the continent, in defining the strategy for wholesale business
– Analyzing MVNO opportunities in more than 6 countries in Latin America
• Biggest mobile market in Latin America and among the biggest in the world
• 4 major mobile operators with mature operations in the country
• Country broken up into regions ; each with its own license for mobile telephony
• Rapidly approaching 100% penetration
• ANATEL has recently launched a public consultation for MVNOs in Brazil
• MVNO regulation is expected to be in force by the 3rd quarter of 2010
• ANATEL has proposed 2 models, Credenciado de Red Virtual & Autorizado de Red Virtual, which will cover the following MVNO types:
– Reseller
– Branded Reseller
– Light MVNO
– Full MVNO
NEREO intends to introduce the MVNO opportunity in Brazil through different conferences to be held in Sao Paulo and Rio de Janeiro
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MVNO OPPORTUNITY - BRAZIL
NEREO’s MVNO EXPERTISE
INDEX
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MVNO OPPORTUNITY - BRAZILMVNO
• Agreement at price level
• Quality management (SLAs/KPIs)
• Mechanisms to garantee the relationship’s evolution (new services, price update procedures,…)
• Value proposition (SAC, products and services)
• Efficient management of the customer’s retention (churn, SRC, customer care)
Essentially, MVNO business consists in managing two key relationships:Mobile Network Operator (MNO) and the end-user
MVNO
MNO END-CUSTOMERS
A Mobile Virtual Network Operator (MVNO) provides mobile services without owning spectrum and usually relies on the Mobile Network Operator’s network infrastructure.
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Services &IT Platform
Ownershipand OperationOf the MobileNetwork
CustomerCare
Service
Marketing& Sales
Services &IT Platform
CustomerCare
Service
Marketing& Sales
Ownership of Miblie Network
Distribut.
Distribut.Push
Leveraging on selected partners through outsourcingSpecific offers for each
market segment
Only one Market
Market Segments
Executed in-house Outsourced to an external partner (MVNO)
Befor
Currently
...by creating offersaligned to the needs ofeach of the existingsegments
...by dividing the valuechain and allowing theentrance of new playersthrough:
Radically reducing costs(increasing the EBITDA)
Reach new consumers inmarket segments not yettapped into (newdistribution channels)
In saturated markets, competition becomes a market-share game, so this new challengeleads MNOs to seek for MVNO partnerships to sustain the overall market growth…
MVNO allow MNOs to address specific market niches which they have not yet tapped into, while incurring lower Subscriber Acquisition Costs (SAC) —adding efficiency to the value chain
Operation of Mobile Network
Pull
Distribut.
Distribut. Push
Pull
Pull
MVNO OPPORTUNITY - BRAZILHow MVNOs create value for MNOs
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Selecting an specific MVNO operational model depends mostly on the commercialstrategy that the new player wishes to implement in order to tap into the market…
-
+Reseller Service Provider Full MVNO Network Operator
Alternative MVNO structures
Level of ownership of the mobile network infrastructure
MNOsTelecommunication companies.
Multimedia Companies
Utilities RetailersNiche Operators
SIM: not self owned Prices: are based on
negotiations with an MNO under a retail-minus regime for the MNO prices
Brand: own brand or co-branding with the MNO (« powered by »).
Business Model:─ Revenues: based on
revenue sharing with the MNO
─ Costs: marketing, sales, distribution
Branded Reseller
SIM: self owned Prices: own and independent
from the MNO Brand: own brand or co-
branding with the MNO ( powered by »). Client ownership possible
Business Model:─ Revenues: from traffic of
it’s own customers─ Costs: wholesale access
tariffs, marketing, sales, distribution. OPEX and CAPEX associated to IT platforms
No network infrastructure Can potentially have a VSplatform No capability to set prices No ownership of the client
Radio Access Network Complete network infrastructure
No network infrastructure Own VAS platform Own billing platform Own Customer Care Ownership of the client
With network infrastructure(no radio) Own VAS platform Own billing platform Own Customer Care Ownership of the client
SIM: self owned Prices: own and independent
from the MNO Brand: own brand. Complete
ownership of the client Business Model:
─ Revenues: from traffic of
it’s own customers
─ Costs: wholesale access
tariffs, marketing, sales,
distribution. OPEX and
CAPEX associated to IT
platforms
SIM: self owned Prices: own and independent
from the MNO Brand: own brand. Complete
ownership of the client Business Model:
─ Revenues: from traffic of
it’s own customers
─ Costs: wholesale access
tariffs, marketing, sales,
distribution. OPEX and
CAPEX associated to IT
platforms and network
elements
MVNO OPPORTUNITY - BRAZILFunctional model Characterisation
No network infrastructure Can potentially have a VSplatform Capability to set prices Possible ownership of theclient
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MVNO OPPORTUNITY - BRAZILMVNOs in Europe
Number of MVNOs and their market share in Europe (end of 2009)
MVNOs have been quite successful in garnering market share in most European countries
Source: Nereo Analysis with company data
<1%
1% - 5%
5% - 10%
10% - 15%
>15%
MVNOs Market share
Spain: 22
(Simyo, Lebara)
Portugal: 5
(UZO, Tele2)
France: 11
(Carrefour, Tele2, Virgin)
Luxembourg:2
(KISS, Transatel)
Belgium: 35
(Simyo, Transatel)
Netherlands: 39
(Simyo, Tele2)
Norway: 16
(Mobyson, Sense Talkmore)
U.K.: 25
(Virgin, Tesco)
Finland: 9
(Saunalahti, Oyj)
Sweden: 18
(ACN, Sense)
Germany: 29
(Ay yildiz, Simyo)
Austria: 5
(Yesss!, Tele2)
Denmark: 16
(CBB Mobil, Telmore)
Italy: 14
(COOPVoce)
Switzerland: 5
(COOP Mobile, Tele2)
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Brazil is among the leading countries in terms of mobile penetration in Latin America
Mobile Penetration – Brazil v/s LATAM
BRAZILIAN MOBILE MARKETKey Indicators
Communications Market Situation - Brazil
Market Leader
(2009E; market share in terms of subscriptions in %)(Penetration in %; GDP per capita in 000s USD; 2009 E)
Brazil has a favorable mobile penetration-GDP ratio in comparision with other countries in LATAM
Source: TRAs, CIA Factbook, NEREO Analysis
0%
20%
40%
60%
80%
100%
120%
- 5,0 10,0 15,0 20,0
Mobile Fixed Broadband
Telefonica/Vivo
Embratel/Claro/Net
Oi/Brasil Telecom
TIM
30.1 %
25.4 %
23.7 %
20.4 %
27.2 %
13.0 %
51.6 %
0.0 %
23.2 %
25.1 %
37.3 %
0.0 %
Each of the Fixed Line players is a leader in their license region─Region 1- Oi─Region 2 – Brasil Telecom─Region 3 - Telefonica
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Mobile position evolution (2007 – 2009)
• Oi has made impressive gainsin its position in the market inthe recent years
• Vivo has been able tomaintain its position in themarket inspite of slipping in2008
• TIM has been slippingsignificantly and has not beenable to arrest its slide
• Claro is poised to take overthe no. 2 position based onrecent trends
% subscriber share;% value share
Brazil currently has over 179 million subscriptions; a market penetration of 93%
MVNO OPPORTUNITY - BRAZILMobile Positioning – Leading Operators
10%
15%
20%
25%
30%
35%
10% 15% 20% 25% 30% 35% 40%
% Value share
% S
ubsc
riber
Share
VIVO is the market leader both in terms of revenues and subscriptions
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CATEGORIES
ARPU
Pricing Capabilities
Interconnection
MVNO OPPORTUNITY - BRAZILMVNO Models Comparison
Customer Ownerships
N/A
CREDENCIADO DE RED VIRTUAL
BRANDED RESELLERRESELLER
% revenue sharing over basic services’ ARPU
Outbound ARPU
N/A
N/A
N/A
N /A
AUTORIZADO DE RED VIRTUAL
FULL MVNOSERVICE PROVIDER
Outbound + Inbound (rev. Sharing) ARPU
Outbound + Inbound ARPU
Does not rely on MNO infra. for price differentiation
YES
Own rating & billing capabilities
Advertising & Marketing
expenses
MNO bears all the operational and markeriting cost
The MNO partially contribute to the SAC expenditure
MVNO bears all the operational and markerintg cost
MVNO bears all the operational and marketng cost
NO NO YES YES
Traffic Costs
OwnNumberingResources
N/A Wholesale cost (diff. Cost per destination)
N / A N/A
Wholesale cost (diff. Cost per destination)
Wholesale cost (airtime) + Interconnection cost
Short codes/premium numbers for Customer Care
Own IMSI range, NRN, SPC
ANATEL has proposed the following two models which will serve to categorize the types and characteristics of permitted MVNOs
10
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MVNO OPPORTUNITY – BRAZILProjected Evolution of the Brazilian Mobile Market
Mobile Revenue Projections – Brazil
(2010-2014; USD millions)
Projections – Brazilian Mobile Subscriptions
MNOs MVNOs
(2010-2014; millions of SIMs; % of SIMs)
186 189 193 198 203
- 4 6
8 10 0,0% 2,0% 3,1% 4,0% 4,6%
2010 2011 2012 2013 2014
MVNO Business in Brazil will account for more than 600 million USD by the end of 2014
Source: www.eMarketer.com, IBGE, NEREO Analysis
MVNO Market Share
Brazil will continue to maintain a CAGR of 4.1% to reach 212.3 million subscriptions byend-2014
2010 2012 2014
28,146 29,376 30,440
Mobile Revenues MVNO Revenues
MVNO Revenues 0 228 630
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MVNO OPPORTUNITY - BRAZIL
NEREO’s MVNO EXPERTISE
INDEX
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MVNO Experience Geographical Distribution of MVNO projects
MVNO Functional Model
Branded Reseller
Service Provider
Full-MVNO
PROJECTS EXECUTED
3
4
15
EUROPE
18 Projects
Middle-East & Asia
3 Projects
We have executed over 20 projects in the last 4 years leveraging on our MVNO Specialisation
NEREO has assisted clients in identifying business opportunities, negotiating with Host Network operators and launching MVNOs of all models in over 12 countries….
Central America
1 Project
OUR MVNO EXPERTISENEREO in the MVNO World (I)
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www.nereoconsulting.com