Mobile services

MVNOs: Opportunity or Threat for Indian Telcos?

India's government has received mobile virtual network operator (MVNO) license applications from 80 companies after deciding earlier this year to let MVNOs provide services in the country. The licenses are designed to let companies offer telecom services by purchasing airtime and bandwidth from existing network operators.

Experts believe that a number of incumbent operators will be keen to support MVNOs, especially in rural areas. Many incumbents, particularly government-owned service providers like Mahanagar Telephone Nigam Ltd. (MTNL) and Bharat Sanchar Nigam Ltd. (BSNL) , have lots of capacity that could be leased to organizations procuring MVNO licenses.

"It will definitely help the service providers with a lot of fiber assets, like BSNL, MTNL, Railtel and Powertel," says Amresh Nandan, a research director at analyst firm Gartner Inc. "We believe that two to three MVNOs will emerge at regional level and target rural areas and small towns."

Private-sector network operators could also benefit from MVNO business in areas where yields have typically been low. "It makes sense for private players to go for the MVNO model by outsourcing at regional or rural level," says Nandan. "It empowers them to focus on areas yielding bigger profits."

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India's telcos might also be interested in setting up their own MVNO operations, developing local brands to address particular regions. As the broadband market expands, service providers are being forced to educate consumers on the benefits of Internet connectivity. A local player with local knowledge and branding might be more suited to this role.

"In India, as in other markets, MVNOs would need to identify a niche," says Nandan. "MVNOs would need to focus on branding, customer service and educating the customers," That could see a variety of different MVNO business models emerging in the Indian market.

Even so, in other parts of the world, MVNOs have added to the pressure on network operators, squeezing margins with low-cost tariffs. That is sure to be a worry for Indian telcos, although perhaps less so than elsewhere. Average revenues per user (ARPUs) in India are among the lowest in the world, which will make it hard for any MVNO to compete on price. And if MVNO activity is largely confined to those regions in which network operators are less active, there may be even less cause for concern.

— Gagandeep Kaur, Contributing Editor, special to Light Reading

rauf.sulya 11/15/2016 | 4:35:43 AM
Re: Sounds Positive Well Said..CAPEX & OPEX plays huge role & also skilled manpower to run the operations as well...Even me too from rural part of India from Karnataka, still lacking..Hoping to see more FTTH connections..
Gagandeep Kaur 11/14/2016 | 11:41:20 PM
Re: Win Win for MVNOs and Telcos Thanks. Hope Govt does provide subsidy or loan for MVNOs focused on the rural segment but as of now I haven't heard of any such initiative...
rauf.sulya 11/10/2016 | 7:20:47 AM
Win Win for MVNOs and Telcos Very good article Gagandeep Kaur about MVNO in India. The best & efficient utilization of exisitng fibers of Government run companies like BSNL, MTNL , Rail Tel, etc etc...
Also an opportunity for startups to start their business. Government should provide Loans, subsidiaries who wants to run as MVNO. Also, broadband/ Internet can be
penetrated to rural areas by this .

This is not a threat to Telcos as they have complete backbone infrastructure setup & ready. Off course, MVNOs has to lease capacities from these providers who has well established
Tier1 / Tier2 Network connecting to Internet and International network.

It is an opportunity for existing Telcos to sell thier capacities/ services to MVNOs. I am sure, these MVNOs does not have fiber infrastructure, network infrastructure mainly Core network and International network which is required to connect to Internet.
SystemEn18668 11/8/2016 | 11:48:35 PM
Sounds Positive Comparing it with india policitcs, Central govt and then there are state govts, if you are penetrating deeper into the geography the users mght get better services. In my hometown in HP, I still struggled to get decent OTA internet connection ( haven't tried Jio there yet) but with MVNO's we might get dedicated Small telco groups whose bread and butter are those small areas. 

Rural always have been left behind because of lack of business cases, opex and capex issues. 
Definitely worth to enhance the user experience. 

I think govt should support the initiative and may we later add 911 type of service over it as well.
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