Building The Growth Strategy For  A Mobile Virtual Network Operator

What was the challenge?

A UK mobile virtual network operator (MVNO) was struggling to compete in a mobile market where network operators were consolidating and VOIP services were expanding rapidly.  The client's existing business plan would not achieve strategic scale and would not provide an adequate defence in this changing market.  We were asked to develop options for how the business could grow rapidly in order to provide long term security.

What was the approach?

Our first task was to fully explore the prevailing market conditions, the forces that were driving the market and the potential longer-term outcomes. This, in conjunction with an assessment of the clients existing strategy, enabled us to establish the risks and opportunities that were possible.

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The rising cost of mobile handsets and the increasing use of data services was extending the typical user contract term.  This meant that less customers were entering the market which in turn was making it extremely difficult for the client to grow its share.  In parallel to this, new operators were entering the market with enhanced propositions that included content services as well as traditional mobile connectivity.

The client had an established route to market and profitable network economics, however sales volumes through existing channels were limited thus preventing them from achieving strategic scale before the end of the network agreement.

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We developed a number of potential options for the client to consider.  These included accelerated organic growth, proposition expansion, acquisition of another MVNO provider and the possibility of becoming a network operator in their own right.  We examined the capability and readiness of the business to adopt each scenario, the specific actions that would need to be taken and the timelines required for success.

In each case we completed detailed financial modelling including the likely capital investment, the ongoing operating costs and the financial gains available. Each scenario was supported by a comprehensive sensitivity and risk analysis.

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Throughout the engagement workshops were held with the executive team to discuss the research findings and work through the opportunities.  This ensured full engagement with the process and ownership of the resulting solutions.

How did we help?

Through this work we demonstrated the unique strengths of the client’s market position and the many options available to them.  Although there were many, challenging market forces we showed how the changes in the operator and competitor environment could provide opportunities for mitigating strategies.

This work provided the foundation for further expansion of the MVNO services and the client continues to be one of the top MVNO providers in the UK.