Markets grow and then decline as some MVNOs become MNOs or MNO sub-brands
What is a Mobile Virtual Network Operator (MVNO) market? For those concerned about competition along the entire mobile ecosystem supply chain with distinctions between network infrastructure and branded retail operations, Mobile Virtual Network Aggregators and MVNOs are distinct from the Mobile Network Operators that provide them with wholesale minutes of voice and gigabytes of data. That means entirely separate ownership and control, or at least some kind of joint venture as was Virgin Mobile USA originally with its MNO host Sprint as a shareholder.
In some cases, MVNOs are simply resellers or are light MVNOs that provide little technical infrastructure themselves and rely most extensively on their MNO host. In other cases, hybrid or full MVNOs have much of their own infrastructure — other than the Radio Access Network — including the core network in some cases, such as broadband and cable TV company Altice in the U.S.
MVNOs and MNO sub-brands enable differentiation and price discrimination
With saturating cellular penetration, MNOs seek to maintain prices and profit margins for their own primary-branded retail offerings, while also capitalizing directly through sub-brands and indirectly by wholesaling to MVNAs and MVNOs. Sub-branded offerings such as AT&T’s Cricket Wireless and Metro by T-Mobile typically seek to attract more price-sensitive customers. They enable MNOs to achieve some price discrimination between their brands and to compete most effectively with MVNOs at the retail level.
MVNOs also tend to be lower priced and target specific demographics such as seniors, Trump supporters or Hispanics in the U.S., or leverage established brands and distribution such as supermarket Tesco’s in the UK. T-Mobile US, for example, was happy to supply MVNOs offering low-price retail services funded by U.S. government programs including USF and ACP.
The MNO has preferred to supply many of these MVNOs indirectly through MVNAs rather than sign them up and manage them themselves. MVNAs such as PWG and Plintron take on those tasks — including the risks of serving many small MVNOs — for the markup they make between the wholesale prices they pay the MNO and the higher wholesale prices they charge the MVNOs.
Enty and exit strategies
Sub-brands are not really MVNOs, but are often regarded as such, or are grouped with them in market analysis. Many sub-brands have resulted from acquisitions of other MNOs (e.g. of Metro PCS by T-Mobile USA in 2013 and of Cricket Wireless by AT&T in 2014), or of MNVOs (e.g. of Mint Mobile by T-Mobile in 2024). While Mint Mobile is the poster child for U.S. MVNO success in recent years, its $1.35 billion acquisition and integration means that it is no longer an MVNO. Similarly, French MNO Bouygues Telecom completed €950 million acquisition of the nation’s largest MVNO La Post Mobile with 2.4 million customers in 2024.
Many MVNOs are transient entities. They tend to fail, get taken out through acquisition or only operate as an MVNO while building a new MNO. Few flourish long-term and remain independent of their MNO host. Even Tracfone, operating independently in the U.S. since the 1990s, was acquired including 21 million subscribers by Verizon in 2021.
Notable exceptions include Tesco Mobile that started as and has remained a joint venture with Telefonica O2 in the UK. Tesco Mobile also operates in Ireland, Slovakia and the Czech Republic. After various false starts over the decades, U.S. cable companies also including Charter (Spectrum Mobile) and Comcast (Xfinity Mobile) are faring well with mobile subscriber acquisitions as MVNOs. Comcast — with extensive fixed networks where it provides home broadband and video services — claims it offloads about 90% of overall network traffic onto Wi-Fi. This minimizes wholesale cellular costs paid to its MNO host Verizon.
Dish Wireless (now Boost Mobile) entered the market largely as an MVNO. But that was only a transitory step towards becoming an MNO as its parent (now EchoStar) builds out its national 5G network. Boost was founded as an MVNO in a joint venture with Nextel. It became wholly owned by that MNO and then by Sprint in the acquisition of the latter. The Boost subscriber base was sold to Dish as a concession to get Sprint’s merger with T-Mobile approved by the U.S. authorities in 2020.
Assisting and inhibiting MVNOs
MVNOs’ share of mobile subscribers varies enormously among nations. At the MVNOs World conference in Vienna this May, an aspiring Polish MVNO estimated MVNO penetration at only around 3% of total subscribers in his nation, versus 5% in US, 10%-15% in Japan, France, Spain and Australia, 16% in the U.K., 20% in Germany and 35% in Denmark.
Why are there such large differences and what makes a nation fertile for or hostile to MVNOs? Relatively low US MVNO penetration is significantly a function of exits with success of MVNOs including Tracfone and Mint Mobile being bought out by MNOs. Upon acquisition by Verizon, Tracfone had around 6% share of all US mobile subscribers.
Regulation, compliance and enforcement are also key. An MVNO’s principle competitors are the retail divisions of the MNOs including the MVNO’s network host. MNOs’ wholesale divisions must operate independently of their retail operations, be adequately resourced and incentivized to succeed. The rest of the MNO including network operations must help not inhibit wholesaling. There must be stiff penalties and enforcement for anticompetitive behavior against MVNOs by any parts of dominant MNOs.
Pricing for profit
Wholesale prices must be at a sufficient discount to retail prices to enable MVNOs to operate profitably. That’s much more feasible in nations such as the US where average retail prices are relatively high and so price differentiation is possible. On the other hand, in low-priced India, for example, despite regulation to foster MVNO market entry since 2017, MVNOs have much less scope to undercut MNOs’ retail prices and have made little headway. With average prices also among the world’s lowest in Poland, according to Rewheel research, MVNOs there will also continue to have a tough time with inevitably thin profit margins.
