MVNOs Not Making Money? Surprised?

When table stakes are $500 million, it is clear making money in the MVNO business is hard. I have been saying this for a while, but now Pyramid Research has crunched the data and come up with the same conclusion in their report, “MVNOs and MVNEs: Analyzing the Viability of Virtual Mobile Players.”

  • Virgin Mobile UK is profitable, but the company has been in operation since 1999.
  • Tracfone has been in the market for a few years and sees EBITDA margins at around 10–15 percent.
  • Telmore, a low-cost MVNOs, had even lower EBITDA margins at YE2004.

Their data shows that MVNOs account for 2.75% of the total world’s mobile users and is projected to rise to 3.3% by 2010, reaching more than 100 million subscribers.

Pyramid found that most MVNOs are loss-making to slightly above break-even and believes that there is enough fodder to question the MVNO model, at least in its first iterations. Pyramid concludes that not all MVNOs will achieve profitability and the next 24 months will either make or break MVNOs, particularly the prepaid-focused ones.

They think that the next generation MVNO will do well, because they are focusing on ARPU and better margins. Like Amp’D mobile? Hah, I will in 12 months, repeat myself and say…. told you so.