Business Plan MVNO Project Final Presentation

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


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


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


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$


• 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 $/Mb = 0.95*0.033+0.05*0.05=0.03385$


• 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$


• 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 $/Mb = 0.95*0.033+0.05*0.06=0.03435$


• 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$


– Other analysis (Click link)

Microsoft Excel Worksheet


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?

Documents

Business Plan MVNO Project Final Presentation