MVNOs will make the mobile sector more vibrant

By SHIVAN BHARGAVA

In business, timing is everything, and the mobile telecommunication industry is no exception. That is why the most popular term within Kenya’s wireless community now is Mobile Virtual Network Operator (MVNO).

The idea of MVNO – that is, operators that don’t own their own communication infrastructure – has been in existence in other parts of the world for more than 10 years. But in Kenya, it is a relatively new concept.

In some markets, the MVNO concept was a result of regulatory intervention. Some regulators allowed the idea to force established mobile companies to offer wholesale access to their networks in order to make competition more robust.

In other markets, mobile companies responded to market opportunities to offer their excess capacity at wholesale rates to other entities in an effort to bring in incremental revenue on what would otherwise be unused network capacity.

Though a relatively new concept in Kenya, it is one that portends good tidings. Briefly, many things, known and unknown, predictable and unpredictable, will continue to happen to Kenya’s nascent mobile sector.

It is good to note that the regulatory regime is responding well to market demands, and this is good for growth.

For a concept like MVNOs, it is not difficult to foresee success since it brings a real value to the users in terms of freedom of choice.

Last week, Kenyans woke up to the news that Airtel would host three virtual network operators on its Kenyan network. But the truth is that the average consumer isn’t quite sure what services MVNOs provide.

The three firms awarded licenses by the Communications Commission of Kenya (CCK) to operate virtual networks include Tangaza Pesa, Equity Bank, through Finserve Africa Ltd, and Zioncell Kenya Ltd.

The licence allows the three firms to issue customers with branded Sim cards and provide services similar to those offered by mobile service operators. Their services will be anchored on Airtel Kenya’s network.

MVNOs, therefore, bring the opportunity to telecom and non-telecom companies to participate in the mobile sector not by fighting against, but rather alligning themselves with mobile network operators.

New players in the arena can extract more value from their current customers by adding a new revenue stream and strengthening their current value proposition

It is an arrangement that is beneficial to both parties because it allows companies like Airtel to exploit their network capacity, IT infrastructure and service and product portfolio to acquire untargeted segments, add new revenue streams and reduce spare capacity.

On the other hand, an MVNO can exploit its brand awareness, distribution channels and customer base to provide customised value proposition and complementary products and services to its customers.

Airtel is delighted to be the mobile operator pioneering the innovation in the Kenyan telecoms industry. It is a win-win situation for all the players concerned because the services would run on the unused capacity of the company’s network, ensuring that it maintains a seamless quality experience for its consumers.

As we congratulate the new entrants to the mobile world, it is also imperative to note the buoyant role played by the CCK in making the idea a reality.

Besides expected benefits to consumers such as wider selection of providers and services to choose from, the venture will accord multiple benefits to the MVNOs, including new revenue streams and low-cost entry strategies to the mobile market while offering a new vehicle to strengthen their value proposition.

Our hope is that after reading this story, readers will either have a good understanding about the MVNO concept or be confused and provoked enough to do their own research.

Mr Bhargava is the Managing Director, Airtel Kenya