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August 29, 2018
With the Asia Pacific MVNO market set for significant growth, it was no surprise when the participants of the MVNOs Series annual survey, Shaping the Global MVNO Market 2018, shared that the region is where they expect to see most growth in mobile overall, and that it is also where they see the best opportunities for MVNOs.
Renato Reis is an independent MVNO consultant at Acqua Telecom, and he previously collaborated with the MVNOs Series on the report Shaping the Asia Pacific MVNO Market, where he shared his insider’s views on the region.
In the lead up to the MVNOs Asia Congress 2018, the MVNOs Series team caught up with Renato Andrade Reis to discuss the recent developments, opportunities and trends across the region. Renato Reis talks about the latest projects he’s been working on, the potential impact of technology on the MVNO sector; including Fintech and Blockchain, and his expectations when it comes to 5G.
Please tell us a bit more about the projects you’ve been working on recently.
I have quite a few projects I have been working on. The main ones are the development of Fintech products for the MVNO sector and further collaborating with the ITU on its knowledge base of the MVNO sector.
Fintech is a sector that has developed a lot in the recent years. With that in mind, our aim is to enter the MVNO sector by providing services such as Micro Insurance, Micro Finance, International Remittance, all the way to actually launching a full Digital Bank – the benefits for MVNOs are amazing. While most MVNOs are struggling with ARPUs as low as 50c from customers and at the top around 12 EURs, Fintech companies work on an average of 50 to 100 Euros per customer per month. MVNOs have the customer base and Fintech companies don’t, in the end that’s the perfect match.
Can you provide a brief snapshot of the MVNO market in the Asia Pacific region as you see it?
Of the entire region, Korea is the one that is having the most difficulties. In the past year or so MNOs have become more competitive and lowered their entry prices apart from making their devices also more accessible to the end customer. This situation has made a very rich MVNO market shrink tremendously to the point of several past MVNOs either closing or literally leaving the market and focusing on other types of services completely.
The Japanese market has seen some openings on the regulatory walls that prevented MVNOs becoming Full MVNOs, however the road for these companies is still long as there is a low percentage of MVNOs which are profitable enough to invest on more infrastructure. Companies such as IIJ and Fujitsu are promoting very well their platforms and the trend is for a strong increment on the MVNO sector in the country. Japan has a few more things going for it, including the Olympics and a strong push for 5G, which could turn out a solution for creative MVNOs to come about.
China has been a very big question mark in the matter of MVNOs. While over 60 licenses have already been distributed only a handful of MVNOs have been launched; such as Snail Mobile, uYou and a few others. Bear in mind that, as everything else in China, when you look at the numbers from these companies – Snail mobile with over 21M customers and uYou with over 5M customers – they are way more successful than their Western counterparts.
However, Mobile portability is a key factor for these MVNOs to still be consider a thrift operation and far from really making a considerable dent in the market. Because of the above the Chinese regulatory committee is thinking of letting foreign investors enter this sector. Hopefully this will happen soon.
Vietnam, Cambodia, Thailand and Taiwan are in similar situations where MVNOs are still in the very beginning and suffering to gain traction. Mostly due to the regulatory conditions presented in these countries.
Malaysia and Singapore are quite strong on the MVNO space. Singapore is a younger and more comprised market but Singtel has been a strong force pushing for change in regulations and implementing a series of platforms and solutions for the market. Malaysia on the other hand is quite mature and what catches most attention is the fact that MVNOs get along extremely well with the local operators, some even having a de facto partnership that should be easily copied to several places worldwide.
Last there is Hong Kong and Philippines, the first is quite well matured in the MVNO market with some old MVNOs already thriving for quite some time and with a strong local presence. However, Hong Kong lacks full MVNOs that can compete with the major operators. Philippines is a very mature market with several MVNOs. What interests me the most is the fact that Fintech is also very advanced in Philippines – a sign as Philippines was also a leader and pioneer in VAS many years ago.
What’s the potential impact of technology on the MVNO sector in the APAC region?
Different to Europe, IoT for MVNOs may not really work in Asia as there are still strong roaming barriers to be overcome in the market. Either way, in China it is very advanced and some of the existing MVNOs are now jumping into it as a mean to become profitable.
It is close to impossible for 5G to affect in any way MVNOs in Asia for at least the next 5 years as MNOs are not willing to share this with the existing MVNOs. Bear in mind that even for the MNOs themselves the financial model for 5G is still very uncertain and it is very likely based on a debt-ridden way that MVNOs cannot cope.
There is a huge market in Asia for the embedded sim, as its main focus is on the International Roamer. However, we are speaking of semi MVNOs in the sense that these companies cater and operate in a different way to traditional MVNOs. It is a big market and certainly one that MVNOs can benefit from, but not as otherwise been done so far. Many companies in the field have come and gone without much success in it. Bear in mind we are speaking of the cheapest data they can find under the cheapest price they can offer. A race to the bottom.
What’s the role of Fintech in changing the banking landscape? How it disrupts the MVNO market?
Fintech is changing the market in the sense that it brings a higher ARPU to operators and further help these reduce churn. It is however a VAS product – Value Added Service more than anything else – in the words of some great CEOs, the fastest way for MNOs to capitalise with the market. With 5G coming up with no real financial benefit for operators and IoT not presenting a real profit-making solution, Fintech has become the best and easiest solution for MNOs to gain profits. Upselling existing customers is probably the only solution for MNOs that want to keep afloat.
What are your predictions and expectations when it comes to 5G?
It will fail tremendously. The technology itself, the way antennas need to be distributed. The fact that 5G doesn’t penetrate within buildings and it needs line of sight with a customer is a poor design and one that will bring a lot of frustrations to MNOs and customers alike. It will be 6G by the time we can see real change in the industry.
Finally, what do you see as the main prospects for and drivers of growth in the APAC MVNO market?
The corridor of international transfers between Malaysia and Indonesia is $2.6 billion per year. Between Hong Kong and the Philippines another $12 billion, and the same is repeated to almost every country in Asia. I believe MNOs and MVNOs are going for these markets angry very soon.
Who are you looking forward to meeting at the MVNOs Asia 2018?
Given the tough year for some countries in Asia in terms of MVNOs, Korean and Chinese MVNOs are the ones I am looking forward to seeing at the congress and chat about their ‘next steps and strategies’. It will be very interesting to learn how they are coping with the regulatory difficulties and the competition from MNOs.
Meet with Renato Andrade Reis at the MVNOs Asia 2018 where he will take part in three sessions, including the panel discussions: ‘Learning from fast-expanding and innovating fintech start-ups’ and ‘Everyone is talking about IoT, how can MVNOs get the piece of the pie?’.
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