This blog post is based on an article originally published in APAC Outlook Magazine.
The mobile telecoms industry is used to its fair share of fast-paced change. The continued rise of mobile virtual network operators (MVNOs) is transforming the industry, creating opportunities for players to extend market share and even forge completely new revenue streams.
Among the most dynamic regions globally for MVNO adoption has been Asia Pacific (APAC), which had MVNO revenues of $21 billion in 2023 and is projected to grow at a CAGR of 9.3%. Not only are markets such as APAC, Latin America, and Africa gaining on more established regions (e.g., USA, Europe) in terms of MVNO adoption, but they are also driving some of the most innovative case studies and rapid advances globally.
What’s driving MVNO adoption in APAC?
The global MVNO market more than doubled between 2012 and 2022. Growth has been driven by seemingly unstoppable trends, such as the rising need for communication-based services, the pivot to remote working, the ever-increasing popularity of digital media, and a fundamental shift towards “mobile wallets.” APAC MVNOs have been highly successful in shaping their brand and services to appeal to the growing number of people looking for data-heavy, ultra-convenient services.
Instead of investing in network infrastructure, MVNOs lease it from traditional operators and independently retail their wireless services. Because they do not need to invest and maintain any physical network infrastructure, MVNOs can be more agile and do not even necessarily require a traditional operator background. Indeed, as the rollout of 5G continues and the market becomes increasingly customer-centric, MVNOs are often better than their traditional MNO counterparts at offering flexible, scalable, convenient services that meet the specific needs of an increasingly varied customer base.
However, in a market defined by such constant change, these opportunities have a limited shelf life. As MVNOs look ahead to the trends that will define the market in the future, they must retain a laser focus on growing their subscriber base through competitive, highly individualized propositions.
In this blog, I outline the four biggest market opportunities for MVNOs in APAC.
1. Focus on frictionless 5G services
APAC already leads in 5G SA (standalone) deployments. Countries like South Korea, Taiwan, and Singapore have been true global trailblazers. In seven countries the networks are there, 5G adoption is growing, but monetization has been challenging. Although 5G offers faster speeds, lower latency, and higher bandwidth, these benefits alone are not enough to entice new subscribers or convince significant numbers of existing cost-conscious subscribers to pay more for “vanilla” 5G.
To make the switch to 5G-based MVNO services more compelling, subscribers need use cases that take advantage of this technology’s true potential, such as extended reality (AR/VR/MR), smart cities, autonomous vehicles, and more. As well as killer services, ensuring 5G is as efficient and frictionless as possible will drive subscriber numbers.
One way to achieve this seamless connectivity is through fixed wireless access (FWA), which provides wireless connectivity to a fixed location, such as a home or business, that uses radio signals rather than traditional wired connections like copper or fiber optic cables. To date, 17 operators in eight APAC countries offer 5G FWA services, but there is potential for more. In particular, markets like Australia, where the fixed broadband technology mix is skewed towards xDSL, see the potential for 5G FWA.
Growth in 5G FWA is anticipated to be particularly dynamic in APAC in the coming years as existing, often US-based FWA deployments begin to reach saturation. Pioneers of the technology can already demonstrate its success. In 2019, Globe Telecom in the Philippines was the first country in APAC to introduce 5G FWA. Last year, it accounted for 25% of its home broadband revenue.
2. Thinking big with B2B market expansion
Some of the most significant opportunities in 5G lie in creating an ecosystem for B2B and M2M use cases. Traditionally, however, telcos have focused on the B2C segment as the main driver of subscribers and lucrative business models.
APAC MVNOs, in particular, have shown acumen and agility in their pursuit of B2C market share, with 41% of telcos in the region relying on B2C for over 90% of their total revenue, compared with a global average of 15%. It is now time to turn that same focus beyond the consumer segment. With many 5G use cases vying for attention, how APAC telcos direct their investment dollars will be pivotal. In the short term, the two areas showing the most promise are 5G SA (standalone) and IoT.
5G SA and private 5G – This is an obvious first step into the B2B world for MVNOs because the segment requires a streamlined business model that is not dissimilar to the existing B2C model. A recent GSMA report into private 5G network opportunities reveals that 16% of APAC operators expect private networks to contribute to more than a fifth of enterprise revenues by 2025.
IoT – Connected cars, smart grid, and Industry 4.0 are just some of the IoT-based use cases anticipated that 5G enables. According to a recent TMForum survey, 57% of telcos in APAC expect IoT to be the best opportunity for growth. For example, IoT, together with machine learning, is automating agriculture in Singapore, while in New Zealand, IoT is being leveraged to improve the efficiency and transparency of supply chain logistics.
3. Zone in on digitally-savvy power users
APAC smartphone adoption is expected to grow from 76% in 2022 to 94% in 2030. By then, 5G will dominate 55% of the tech mix. Per smartphone, monthly mobile data traffic, which is already higher than the global average, is expected to surpass 60GB per month by 2028.
This means a growing cohort of brand-conscious big spenders who are digitally savvy and unafraid to churn. While this segment has always been an obvious attraction for mobile telcos, it is in markets where existing MNOs have been slow to target offers for them that digital-born MVNOs will have their chance to shine, moving in quickly to provide the offers and propositions these power users crave. Consider the story of Telekomsel in Indonesia, which launched its digital-only service “by U” targeting young and digitally-savvy consumers. With “by U,” every digital touchpoint was re-imagined, from ultra-quick SIM delivery to users’ homes, convenient and quick top-ups, and a 100% digital onboarding process.
4. Disrupt and differentiate with new technologies
As the 5G ecosystem develops and unfolds, new technologies are important in expanding revenue opportunities. Technologies like eSIM, network function virtualization, software-defined networking, AI, blockchain, edge computing, and the metaverse are all potential competitive differentiators for MVNOs. In the capital-intensive telecom industry, greenfield MVNOs are in an enviable position of being able to tread lightly and change direction fast. They can use these technologies to disrupt the traditional order and provide competitive differentiation. For example, we already see metaverse and other extended reality technologies flourishing in advanced APAC telecom markets like South Korea, China, and China. SK Telecom launched its metaverse “ifland” app in 2021. It has been downloaded 12+ million times, with a monthly average interactive time of 61 minutes. It received more than 2000 partnership inquiries in its first 18 months.
New technologies will reshape the sector in many other ways, too. GenAI will radically improve self-service capabilities and help personalize plans for every subscriber. Blockchain is used to build distributed network systems with smart contracts for easy onboarding. Edge computing will advance healthcare applications, autonomous driving, industrial IoT, and smart grid.
As the APAC mobile segment approaches a uniquely dynamic stage, there are major market opportunities ahead for MVNOs. Growing 5G adoption, coupled with the innovative use of new technologies and the drive to extend wireless access using FWA, will bring compelling services to millions of new subscribers, both in the traditional consumer segments and the burgeoning B2B sector.
By Chinmay Mishra, Senior Product Marketing Manager,
Optiva • February 19, 2024
Chinmay has 13+ years of strategy and marketing experience in telecom and technology. A technology enthusiast, he evangelizes the use of data in decision making. Chinmay is an avid dog lover who devotes time to improving the lives of four-legged furry friends.