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What is an MVNO and how have they entered the Latin American market?

What does mvno mean? The industry of telecommunications is constantly evolving and innovating itself. In the 1980’s, most countries in Latin America had their telecommunications run by a state monopoly. In the 1990’s many of these industries were privatized which led to competitive markets, hence benefiting the consumer. Nowadays in most Latin American countries the consumer has plenty of options to choose what mobile service he wants to use, with virtual mobile network operators (MVNO) as a strong alternative. In the following article of Guinea Mobile, we will explore how MVNOs have entered the Latin American market.

So what is a mobile virtual network operator (MVNO), a Mobile Virtual Network Operator is a wireless service communications provider that rents the network infrastructure from another operator. Because most Latin American countries have emerging markets that have experienced economic growth in the last two decades, there was a lot of space for market penetration optimal for the entrance of MVNO’s. Latin American governments in the last few years have strived for innovation, entrepreneurship and competition.

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For MVNO’s, Latin America was a very viable place to find market segmentations. There were many groups in the population that would potentially choose an MVNO instead of a large traditional operator for the advantage in lower pricing, better benefits and more. This is how MVNO’s found niche mobile markets in Latin America. They didn’t own the service being delivered or the infrastructure but they built the customer relationship, service and interface.

In the last decade the telecommunications industry in Mexico for example were very abundant and many opportunities were opening up. Mexico’s mobile market is very rich. 68% of all mobile users belong to one large company. Nevertheless, it is still comfortable for new actors to come in. MVNOs can enter these markets and offer differentiation in their services and in their brand. For example, with an MVNO customers can purchase simple plans that include only the things that they want instead of the traditional monthly plans, making the customer experience better and easier.

MVNOs entering the Latin American market

To know more about what is an MVNO, during the late 2000’s and the 2010’s, governments in Latin America decided to open the path for MVNOs with regulations and liberalization of the telecommunications market. They took the success case of Virgin Mobile in the United States as a role model to follow. To allow entrance of MVNOs, in 2005 in Chile and 2010 in Brazil, governments passed laws protecting the expansion of MVNOs in each country.

The first MVNO to arrive to Latin America was Cotas Movil in Bolivia in 2002. Because of several reasons, including high operating costs, this project failed. But we also had Movida in Puerto Rico, Azteca Móvil in Mexico and ETB Movil in Colombia among many others with different results.

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Latin American markets where MVNOs have entered with success

Latin America has experienced a significant change in the telecommunications industry in the last decade which has brought an increase in Latin American MVNO’s. Even if in many cases markets are still majorly dominated by telecom giants like Telefonica, there is a lot of space to grow for MVNOs. The Colombian market has 6% market penetration by MVNOs, which is the most successful case in South America to date. The three main MVNOs in Colombia are: Virgin Mobile Colombia, Uff Mobile and “Almacenes Exito Inversiones”.

Only in Puerto Rico, which is designated as part of the United States, MVNOs have obtained figures close to 10% of the telecommunications market. This case has seen the most impact by the entrance of MVNOs in all of Latin America.

What do MVNOs have to offer to enter new markets?

  • Their business needs to target a very defined niche market.

  • They must have a unique and personalized service proposition and very strong brand marketing to have an impact on the new market.

  • They need to use the power of online services and everything possible to meet the expectations of the target customer segment.

  • Another reason for MVNO success is having stronger and more efficient customer service than traditional telecom companies.

  • An MVNO must always strive to drive down costs and increase profitability while delivering the best customer experience.

  • Offer exclusive services to its frequent users increasing commitment and brand loyalty.

Conclusion

Finally, what is an MVNO and what is their importance? The expansion of MVNOs in Latin America has improved the mobile market, with an increase in quality of service, promotions and availability of exclusive content. As we already know, one of the principles for the success of an MVNO is to be able to control logistic costs and customer acquisition. The MVNO market is designed for exploitation of niche markets, and these niche markets have been key for MVNOs to grow in Latin America. There is still more room for MVNO expansion. The future is bright for MVNOs in Latin America, as we expect to reach 85% of the population owning a smartphone in the next few years.

If you want to know more about how MVNOs operate, don’t hesitate in checking our website at Guinea Mobile.

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