c


  
 

A Mobile Virtual Network Operators (MVNO) is an operator that offers mobile services but does
not own its own radio frequency. MVNO operates through commercial arrangements with
licensed Mobile Network Operators (MNO). The MVNO provides the telecom service under its
own brand to the subscribers. MVNOs do not have their own spectrum. The key difference
between a simple reseller or a franchisee and MVNO is that MVNOs add value and sell either
niche or generalized value added services to subscribers. Generally the MVNOs deliver their own
SIM cards and take care of branding, marketing, billing and customer care. The goal for an
MVNO is to make profit through fulfilling the expectations of the chosen customer segment so
that the customers experience a level of service that satisfies their needs.

The introduction of MVNO is seen as a natural progression towards enhancing free market
principles and contributing to the efficient use of existing telecommunication infrastructure. The
mobile value added services are still evolving. While the potential of mobile technologies is
undeniable, new value added services are constantly emerging widening the range and types of
service offerings and pricing plans, the likely applications and usage. Correspondingly, the
possible types of services an MVNO might offer and the role they would play in the emerging
market would also expand. It is observed that the entry of MVNO in the mobile market raises the
level of competition by providing consumers with a wider choice of service providers, a wider
range of innovative value added services and more competitive pricing plans.

International experience shows that there is a valid business case for MNOs and MVNOs to work
together. It may be very difficult and too expensive for a large MNO to offer successfully a
number of value added services particularly the niche ones, while for an MVNO it could a
successful business proposition. MVNO could provide access service including various types of
value added services in some remote areas or specific towns where MNO may not have its
presence. The ARPU is decreasing every quarter. The mobile operators have to look for alternate
sources to boost their revenues. A number of value added services like ring tones, picture
downloads, game downloads etc. are contributing significantly to the revenue of mobile service
providers. These are simple value added services which a large MNO can manage on its own.
However, there are several niche value added services like booking and delivery of tickets (air,
rail, cinema etc.) which can be efficiently offered through a good distribution network which is
well spread out in the service area. Also an MVNO who has a well-recognized brand name in
some other area would have good acceptability. Such MVNOs would help the MNO to widen and
deepen its market.

Generally, it is said that, markets which are sufficiently mature and tending towards saturation of
demand and where excess capacity is available in the networks are the situations where
introduction of MVNO would add value for the customers and the operators. However, it is not
limited to this alone. In markets like the Indian Mobile Market, which is highly competitive, the
customer acquisition is becoming increasingly difficult and complex. The supply chain or the
present network of retail outlets is unorganized barring the company outlets which are limited in
number. In India many of the 22 service areas have large geographical area and a single service
area i.e. circle is comparable to an average European country. An MVNO with a strong retail
chain may be able to address the issues of customer acquisition and customer care more
effectively in its niche area of operations. The fact that many of the existing MNOs are already
outsourcing a number of its activities, reiterates this aspect.

In general, MVNO and MNO do not compete in the same market. By offering value addition, the
MVNO side steps the competition and its services are differentiated clearly from those of
licensed operator. MVNO can have its own subscribers without competing with the MNO whose
network it uses. For this, if required, MVNO may have its own limited infrastructure in the form
of switch or an Intelligent Network platform.

   c


 

Macro-economic indicators such as GDP per capita and population density vary considerably
across the 23 telecom circles in India. Correspondingly, there are significant differences in the
level of mobile penetration and the degree of concentration in each circle. Given these disparities,
we believe that it is more appropriate to consider India as a collection of 23 separate markets
instead of a single homogenous market when assessing the opportunity for MVNOs. However, all
other circles are significantly under-penetrated, indicating that the opportunity for MVNOs in
these circles may still be a few years away.

The three key metro circles in India offer high levels of penetration and have a significant number
of mobile subscribers who could be viewed as potential switching to an MVNO. These metros are
also characterised by a number of mobile networks and there is evidence of additional network
rollouts by new entrants. This would suggest the potential opportunity for an MNO with a less
competitive retail operation to offer wholesale capacity to an MVNO in a ³win-win´ scenario for
both. While the metros may exhibit some of the characteristics shared by markets with MVNOs,
it would be premature to conclude that MVNOs can enter and operate profitably in these circles
today. Amongst other factors, regulatory policies governing the entry and operations of MVNOs
could have the highest impact on the commercial viability of MVNOs in India.

We expect that 3G services will begin by the end of 2010. The expected capital expenditure
required for network deployment is substantial and demand for 3G services might take a while to
grow. In this situation, MNOs may slowdown network deployment or go for a phase wise
deployment in order to ensure reasonable returns on their investments. This may decelerate the
roll out of 3G services in India. In this case, MVNOs will open a new way for 3G MNOs to
recover part of their capital expenditure even as the demand for 3G services will grow in India. It
is also important to ensure that the expanded capacity and the allocated spectrum are utilized
efficiently. Further, MVNOs can increase capacity utilization of the MNO Radio Access Network
and also can improve spectrum utilization in both 2G and 3G networks, especially important in
our spectrum scarce country.

MVNO's first requirement is that there should be a spare capacity with an existing licensed
operator in the area where it wants to launch its services. We believe that as mobile markets
mature, there will be an opportunity for several Indian companies with strong brands and loyal
customers and those with extensive distribution infrastructure to offer their own brand of mobile
communication services. However, most of these companies neither have the wireless expertise
nor the risk appetite to make significant capital outlays for the wireless business. To facilitate
cost-effective and rapid deployment of such services, a class of Mobile Virtual Network
Aggregators (MVNAs) who act as intermediaries between multiple MNOs, handset providers and
back-end platform providers on one hand, and potential MVNOs on the other, may emerge.

MVNAs would dramatically reduce the time to market and lower the risk profile of launching an
MVNO. It would also allow regional MNOs to become MVNOs and enter other regions. This
would eliminate the expense of investing in a new licence or acquiring a local MNO. Early
entrants would seize the best opportunity, but being hasty is not advised. MVNOs need to make
sure they choose the right partners that can allow them to offer the best range of services for their
targeted segment. This would create an ideal situation for MVNOs that can buy capacity from
mass marketers and exploit niche markets, thereby creating a win-win situation for both the
network operator and the MVNO.




 c

c

A Thin MVNO focuses on sales and the customer interface, leveraging its close customer
relationships, strong brand, or sales and distribution channels. The Thin MVNO adds value by
linking a mobile offering with existing non-mobile products or services. Thin MVNOs do not
operate mobile telecommunications components or infrastructure, but buy the necessary services
from a partner, which may be an MNO, an MVNE, or a Service Operator. A Thin MVNO¶s
products and services, along with its pricing structure, will typically reflect its partner¶s offerings.
The partnership agreement is often based on sales commission or ³retail minus´ wholesale
pricing. However, as Thin MVNOs generally have an amortized cost base they can use a new,
incremental consumer pricing model that is both complementary and competitive with their host
MNO.

The main advantage of the Thin MVNO approach is that market entry is relatively
straightforward because the model is simple to implement and attractive to network partners (that
is the host MNO). The model appeals to prospective network partners because the Thin MVNO¶s
customers use SIM cards provided by the partner MNO or MVNE, making network switching
impractical and creating churn resistance. In addition, the partner usually maintains all the
customer details for billing purposes. Thin MVNOs can thus benefit from adding mobility to its
proposition, but must work beyond this to sustain long term growth. There is little scope to
innovate beyond the service offerings available from the network partner.

Ä
c

The hybrid MVNO, an intermediate model between the Thin MVNO and Full MVNO, takes on
greater responsibility for billing, customer management and service provisioning. The hybrid
MVNO¶s objective of building services differentiated from those of Thin MVNOs, other Service
Operators and MNOs, drives the need for a close customer relationship. The use of branded SIM
cards, along with its own prefixes and number ranges can help a Service Operator create the
perception that it is independent of other mobile service providers. However, the Hybrid MVNO
is effectively tied to its host MNO because changing host would involve the fairly impractical
step of exchanging customers¶ SIM cards. Unlike the Thin MVNO, the Hybrid MVNO owns its
customers and accrues the associated goodwill, but is still dependent on a host MNOs core
network.

The Hybrid MVNO approach provides more flexibility and control than the Thin MVNO model,
but suffers from increased technical complexity in its implementation. Technical complexity
arises because the Hybrid MVNO takes on responsibility for its own IT and network systems.
Less obvious, is the issue of interfacing with the host MNO. At first sight, the Hybrid MVNO is
using interfaces similar to those in the host¶s infrastructure. However, complexity arises because
these interfaces may not be designed to accommodate external systems, particularly if the MNO
has a legacy infrastructure (true for many MNOs.) Consequently, MNOs may be less keen to
support Service Operators. These technical issues and the implementation of service delivery
systems, such as a Short Message Service Center (SMSC), real-time communications systems
(for example IMS), an e-mail platform, or WAP gateway, often results in Service Operators
outsourcing their infrastructure delivery and management.

Hybrid MVNO, unlike Thin MVNO, may compete with their host MNO on price. If it controls
service delivery, it may also be competing on higher margin services and some MNOs may be
less likely to enter into a partnership. This makes it important that before setting-out to attract a
host MNO, the prospective Service Operator creates a proposition that is attractive to the host
MNO and to develop a strong partnership offering with clear synergies benefiting the host MNO.
While a hybrid MVNO enjoys more opportunities for long term growth than the Thin MVNO,
this growth is limited because new services, such as SIP-based services and Voice over IP
(VoIP), require core network components controlled by the host MNO.


 c

Unlike the Thin and Hybrid MVNO, the Full MVNO is different from an MNO principally
because it does not have its own Radio Access Network (RAN). A Full MVNO will maintain
core network and service platforms, as well as have its own International Mobile Subscriber
Identity (IMSI) codes, Subscriber Identity Module (SIM) cards, numbering space and
interconnection rights and responsibilities. As with the Hybrid MVNO, a Full MVNO owns its
customers and accrues the associated goodwill.

A Full MVNO has three main advantages over the Hybrid MVNO. It can terminate calls, flexibly
select the most appropriate host MNO, and can innovate at the leading edge, ahead of other
players in the market. The ability to terminate calls may provide the Full MVNO with new
margin opportunities because of differences in incoming call revenues and outgoing call costs.
These opportunities are not available to Resellers or Service Operators. The margins arise from
the interconnection arrangements in the wholesale agreement that the Full MVNO has with its
host MNO.

The Full MVNO gains additional independence from its host MNO through the ability to switch
host MNO without changing its customers¶ SIM cards. The Full MVNO can achieve this because
it has its own Mobile Network Code (MNC), against which the physical network is defined, and
its own numbering system, thus its own IMSI numbers on customer SIM cards. The Full MVNO
model involves a more complex infrastructure, comprising core network, service creation and
delivery platforms and CRM/Billing systems, making its implementation and operation more
challenging. However, the Full MVNOs interfaces to its host MNO can be considerably less
complex than those required by a Service Operator. This is because the Full MVNO interfaces
with its host MNO using the same well-defined interfaces (such as intra-public land mobile
network [PLMN] backbone network [Gn], or inter-PLMN backbone network [Gp]) that all
MNOs and fixed line operators use when exchanging calls. The Full MVNOs independence
means it can shop around for the best network deal, whether that is driven by radio network
capability (2G versus 3G), coverage, capacity or price. The Full MVNOs control of its customers,
pricing, service offering and the ability to implement leading edge technologies means it can
achieve high levels of service innovation.




 c

 c

MVNOs can be both an opportunity and a threat to existing operators. On the positive side,
they create brand extension, growth of customer base, effective segmentation (for a niche
MVNO), and use of excessive network capacity, apart from the addition of a wholesale
dimension. This is especially good for operators with a smaller market share. However, the
arrival of MVNOs will increase market competition, thus creating downward price pressures.
They can steal business from their own customer channels, and can become a burden on their
own constrained spectrum and bandwidth. Carriers need to find the right attitudes to mitigate
loss of business or even turn them into opportunity.
OY Operators should not see MVNOs simply as a wholesaling model but more of a
partnership. MVNOs can be complementary, to enhance operators¶ investment value,
rather than as a competitor. If carriers and MVNOs are after the same customers, it
will increase the operator¶s churn. Operators do not wish to trade retail for wholesale.
OY Carriers must choose their partners which possess strong brands or distribution
channels to spur synergy as well as to undermine the potential competition. That way,
MVNOs can turn unprofitable customers into profitable ones. Operators should
commercially negotiate deals rather than being forced by the regulator to open their
networks to anyone that requests access.
OY The wholesale model enables carriers to get revenue without the need to cover high
customer acquisition costs. Operators can offload low-value customers to the
MVNOs, but it could expose them to higher credit risks in the event of an MVNO¶s
financial failure.
OY Wholesaling adds complexity to the mobile operator¶s traditional retail-only business.
They need to find the right way to structure the two businesses. Marketing through
separate divisions, as in Western examples, and following lessons from fixed carriers
may be good approaches.
 OY Carriers have to adopt stringent cost control, given the intense pressure from MVNOs
to focus on profit. Furthermore, a ramped-up retention strategy would be necessary to
retain the high-value customers.

 c

There are number of benefits behind the MVNO business model that have been obtained in
the markets where the business model has been launched:

OY Market growth stimulation by serving untapped segments.

OY Open competition to avoid oligopolies, reducing entry barriers to new players. This
situation has led to intensify competition resulting in: greater choice of service
providers and services, price decreases that has benefited customers and a wave of
innovative value propositions and advanced services.
OY Improvement in service quality.
OY Stimulate private and foreign investment that acts as a new source of employment and
economic growth.
OY MVNO can exploit factors such as a superior brand, customer service functions or
content to attract new customers who would not necessarily be attracted to the
existing Host Operator.

   

Regardless of the company that moves forward to become an MVNO, it is the company¶s
customer base that may perceive the biggest win. Subscribing to a MVNO gives customers
easier access to the kind of content and services they want. Instead of filtering through a
generic menu and accessing the Internet, content is immediately available and highly
personalized. Finally, since it is branded, the information looks and feels familiar to the
customer. This makes them more likely to interact and, ultimately, buy.




c
 OY Newcomer MVNOs have to compete with well-entrenched players in a mature
market, where they usually have a strong brand presence. Asian incumbents in mature
markets, particularly in north Asia, already have effective customer segmentation.
The greater marketing and distribution costs pose higher risks to MVNOs as they rely
heavily on branding and marketing to create a strong enough hook to draw customers.
The recently dropped family oriented MVNO, Disney Mobile, admitted its powerful
Disney brand was not enough to outweigh the economies of scale exploited by US
carriers in terms of the range of handset options and pricing plans.
OY MVNOs don¶t have control over service provision. They are completely dependent on
the host carriers¶ network coverage and reliability, and depend on them for service
upgrades. They will have to risk their brands for inferior service quality from the
operators.
OY The necessity for MVNOs to compete on price in the short term, particularly in the
low- ARPU Asian environment, exerts pressure on MVNO profit margins. As more
players enter the market, they will drive down ARPU further, making the financial
proposition less attractive. The budget segment will, at some point, reach saturation,
which will lead to eventual consolidation. Enterprise and business users are less
exposed to price sensitivity.
OY While a niche MVNO can provide differentiated offers to existing mobile players, the
confined market size can limit the growth opportunity for the MVNO. The partnership
could deteriorate if it goes beyond the line into the operator¶s turf.

¢ 
  


The Indian telecom industry has unique characteristics that add complexity to the regulatory
task. Several regulatory issues could directly impact the launch timing, scale and scope of
MVNOs in India. These regulatory considerations can be grouped into three categories:
Industry Structure, Spectrum & Licensing and Operations

    

!"# cForeign Direct Investment (FDI) limitsin India are

different for each industry sector. Given that MVNOs will be launched predominantly by
non-telecomfirms, the level of FDI investment in anMVNO may require clarification.
2. s  c   c If the regulator follows an approach of
maintaining a strict separation between service provisioning and network operation, the
regulator has to stipulate the maximum equity that MNOs can hold in their affiliated
MVNOs.

3. #   
c
 $ % c$&
  As MVNOsincrease an MNO¶s
subscriber base, thequantitative thresholds beyond whicha MNO is seen as having SMP and
theimplications of achieving that statusmay require further clarifications.

4. 
'     cThe present taxation level of Indian telecom players at 17%
26% is one of the highest in the world. Since MVNOs work on thin margins, high tax rates
could prove to be an obstacle towards a viable commercial model.

 (s

1. s     c An effective approach for granting licences to MVNOs

(e.g. auctions, fixed fee) which meets the regulator¶s objectives as well as the commercial
requirements of all stakeholders would be a key prerequisite.

2. c
    )   Clarification on the regulatory position on access to
Universal Service Obligationfunds for MVNOs who may chooseto provide services in rural
areas.

3. # 
 

MVNOs are typically launched as anadditional service
by an incumbentin a different industry (e.g. media, retail).Clarifying the role and jurisdiction
of different regulations in the contextof an MVNO¶s operations will serveto streamline their
operations.

4.   
 
 The MVNO model benefits further if spectrum sharing
and trading areallowed, as it gives MVNOs increasedflexibility. The regulatory positionon
such issues is not clear today.


 

1. * 
 


    If regulations mandate open access, then they
need to address issues such as how much of the MNO capacity will be shared and at what
price. It has the further task ofmonitoring the implementation ofthese guidelines by MNOs.
2. #  cThepolicy of charging ADC (Access DeficitCharges) on
mobile operators could affect the viability of MVNO business models, given their thin
margins relativeto an MNO.

3. +   c 

 An MVNO may require separate national
and international roaming agreements from its host MNO. Guidelines may be necessary to
definethe options available to an MVNO. 

4.  
  

 

 The host MNO will have access to a MVNO¶s
subscriber database.A clarification in the regulatoryposition governing access to andsharing
of this information for purposes of commerce and national security may be necessary. The
regulatory challenges surrounding MVNOs in India are considerable and will require
concerted action by severalkey stakeholders. While the marketposes some opportunities for
leading international MVNOs and local Indian companies to consider MVNOs in India, the
absence of a clearly definedregulatory framework acts as a significantimpediment today. A
proactive approach to MVNOs and their operating framework in India could help address
additionalissues raised by expected trends such asthe launch of 3G services in India.




*¢s# ,¢¢c

*¢s# ,¢¢c¢,+)s

¢ 
  ,'
 ¢ 
  
   
 c
$  
  c   1.Y Hong-Kong Example network: Hong Hong Kong: 7

  
 2.Y Norway Kong Norway: 8

1)Y 40% network

capactiy dedicated to
MVNOs
2)Y No limit to number of
MVNO licences
3)Y Uniform wholesale
pricing regardless of
MVNO



 
 1.Y Australia Example Market: Australia 1)Y Australia : 20
c 2.Y Belgium 2)Y Belgium : 15
1)Y Mandatory sharing of
3.Y France 3)Y France : 17
networks enforced on
4.Y Denmark 4)Y Denmark : 11
operators with
5.Y UK 5)Y UK : 18
significant market
share
2)Y Wholesale pricing on
a cost plus basis with
regulated margins

   1.Y Austria Example Market: Japan 1)Y Austria : 4

c 2.Y Canada 2)Y Canada : 5
1)Y No requirement on
3.Y Japan 3)Y Japan : 2
MNOs to open
4.Y Portugal 4)Y Portugal : 2
networks to MVNOs
2)Y MNOs allowed to
price discriminate
based on its own
business objectives
# 
 1.Y Bolivia Example Market: Argentina 1)Y Bolivia : 1
   2.Y Argentina 2)Y Argentina : 0
1)Y Large number of
c
MNO licenses
granted to make
market unattractive
for MVNOs
2)Y Stringent roll out
obligations to MNOs
make MVNO entry
difficult

$ 
c 1.Y Greece Example Market : Italy 1)Y Greece : 0

2.Y Italy 2)Y Italy : 0
1)Y MNO not allowed to
host MVNO till 2011
as part of 3G license
agreements




  c

To launch a successful MVNO, it is important to ensure that you have in place all the critical
success factors.

In order to analysing the success factors by doing the study of MVNOs worldwide, we
identify 6 broad categories of MVNO strategy, each leveraging different assets and selecting
a different position in the market place:
 

c-* 

ËY Total MVNO market ± 3% of Total Mobile Market

ËY Currently, over 400 active MVNOs operated by over 360 companies

ËY Western Europe ± 40% of the worldwide MVNOs, Netherlands and Belgium

represents the highest share

ËY Hong Kong - highest MVNO penetrated Asian market with 7,20,000 customers, i.e.
around 7.5% market penetration

ËY Govt. of India recently accepted TRAI's proposal for the entry of MVNOs in the
domestic market


c,  

In Europe the growth rate of MVNOs is more than 100 and following are the most leading
MVNOs:
. Primus Telecom, Scarlet Telecom, Telenet, Transatel.
#
 CBB Mobil, Telmore, Debitel, Tele2.
 
Song Networks, Tele2, Chess, Sense, Zalto, You.

Scarlet, Tele2, Lebara, Yellow Telecom Call4Care, PEP Talk, Hema, TMF,
Easy Mobile.
)/ : Virgin, BT Mobile, Fresh, Mobile World, Tesco, Easy Mobile, Timico,
Primus, Buytel TravelFone (Ryan Air), Toucan.

MVNOs and European Regulatory Environment

In various European countries, MVNOs¶ fortunes have been greatly affected by the decisions
and actions of national regulators and the European Union.

1.Y United Kingdom: operators opened their networks to MVNOs entirely voluntarily,
with no regulatory intervention sought or required. However, in other countries, the
national regulator has taken steps to force the MNOs to sell capacity to MVNOs,
citing competition issues.

2.Y #
  Above mentioned case has been in countries such as #,c¢/where
the legislation passed in mid-2000 obliged SMP providers to conclude MVNO
agreements" That is how regulator made the ground breaking move of putting mobile
operators on the same basis as fixed operators, giving new entrants rights to national
roaming across all networks and the right to interconnect.

3.Y  the Swedish regulator also requires that 3G networks host MVNOs but it is
not very prescriptive in its definitions. However, overall its strategy is amongst the
most pro-MVNO.

4.Y 
: Italy stands out in Europe as the only significant country where the regulator
has determined that network operators do not have to open their networks to MVNOs
on request. The Italian regulator Agcom has decreed that the network operators
 should be afforded a level of protection to develop their 3G businesses, in a decision
that was upheld by the EU in December 2005.94 Although initially Italian regulators
attempted to legitimize MVNO but the four Italian incumbent operators strongly
opposed regulators¶ attempts to regulate and legitimize MVNOs. Because of this
pressure, the Italian government decided to delay MVNO legislation until at least
2010, so to give the incumbents¶ time to (i) recover UMTS costs, and (ii) establish
themselves in the mobile data market.


c
0)/


c

Virgin Mobile is the UK's largest mobile virtual network operator and uses T-Mobile's
network. Virgin Mobile is part of the ntl:Telewest group. The group is the first to be able
to offer 'quadruple play' to customers: mobile and fixed line telephony, broadband
internet and television/
Virgin Mobile employs approximately 1,700 staff at three sites, Trowbridge, London and
Daventry, and has an outsourced customer service centre operated by approximately
200 staff in Middlesbrough. Virgin Mobile was voted 22nd in the Best Workplaces in the
UK Financial Times survey for 2006.

  
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1.Y    : When Virgin Mobile UK faced the welcome challenge of
skyrocketing growth, it quickly learned the hard way that a traditional server-based
architecture that relied on tight coupling of services could not help them meet it.
During critical sales periods, such as the run up to Christmas, even short system
 outages could prove costly and potentially tarnish the company¶s great reputation for
customer service. As part of a corporate strategy to grow its online capability,the
company sought a new solution that would provide both the scalability to accomodate
rapid, unpredictable changes in demand and the fault tolerance required to maintain
continuous availability.

6Y Solution Overview:

MY Replaces point-to- point and MOM with GigaSpaces Space-Based architecture

for SOA.
MY Easily handles 600% increases in transactions per day.
MY Scales dynamically to keep pace with fluctuations in demand.
MY Provides resiliency to safeguard against backoffice failure.
MY SBA is a natural extension of message-oriented architectures, providing the
same capabilities as MOM²including publish-subscribe, request-reply, and
message queues²without the difficulties associated with integrating MOM
systems with disparate local information models.

6Y Key Benefits-

MY #
 


- Easily handled tripling of daily online orders. Core
direct sales have increased by more than 40%.
MY 
- -PSJ's innovative "Error Hospital" ensures transactions
are saved even during a back-office outage.
MY ,' 
  
- In 2006, following a people's choice selection
process that tabulated more than 350,000 votes in 20 consumer categories,
Virgin Mobile's web site powered by GigaSpaces was named "Best Website
of the Year" in the telco category.
MY ¢
0  -   - Reusable code frameworks boost developer
productivity and reduce time to deployment.
 2.Y .    

   had Virgin Mobile looking at Data
Center Automation to address application release management and configuration
change control management.

6Y    Virgin Mobile chose BMC BladeLogic to address their business needs after
a benchmarking exercise to prove the capabilities of the BMC BladeLogic solution.

6Y ¢ 
MY Easily met deadline for deadline of Tibco deployment across multiple
environments, saving man hours and licensing costs
MY Able to establish baselines to address configuration and compliance issues
Eliminated human error in application deployment, supporting ability to
ensure continual compliance
MY Application teams freed up to concentrate on their core strengths, rather than
deployment efforts
MY On average, application deployment time on a single server decreased from 6
hours to 30 minutes

c


Finnish MVNO market is interesting due to the presence of a large number of diverse
MVNOs. However, despite the Finnish success in the market, the country has fallen behind in
international rankings and mobile data usage during the last two years. Finland has also been
late compared to the leading European markets enabling MVNOs.


 
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There are already more than fifteen MVNOs in Finland, and the amount is increasing. New
MVNOs together with new content providers bring a large number of new players in the
market. As a consequence, the value chain becomes a more fragmented value net.

The main business strategy of the MVNOs in Finland is to compete with price. Thus far, only
few MVNOs have chosen clearly another than the low price strategy.


,'


!"Y 2-

MY It was the first MVNO in Finland using its own MSC. An own MSC enables the
production of own services and independent interconnection roaming agreements.
MY Tele2 has also a remarkable positioning other parts of the Europe: it has operations
(fixed and mobile) in 23 countries and 6 million mobile subscribers
MY It provides fixed Internet services in Finland (among many other countries), MNO
services in many countries (e.g. Sweden) and MVNO services in some European
markets. It is an example of 
 
  
"
MY 
:
The main business strategy of Tele2 Finland is to offer µaggressively¶ priced basic
services through their modular network structure: they offer pre-paid subscriptions
without monthly charge. Despite of choosing the price leader strategy, Tele2
negotiates its interconnection contracts itself and uses its own platforms and existing
resources for service development. The costs are kept in minimum with economies of
scale: by using existing service creation resources, concepts and personnel. In
addition, exploiting the Internet as the main distribution channel allows minimization
of distribution costs.

2"Y c8
ÚY c
, the leading commercial television channel in Finland has an entirely different
business strategy in the mobile market. Because of their existing content provision
capability and customer base, they compete and differentiate with content services. As
a MVNO they provide a mobile subscription with complementary service packages
including different types of content. MTV3 buys the all- inclusive network service
from Elisa Mobile.

8"Y  9  

ÚY ã
   a large IT service company, use  c 
  

 : they integrate GSM subscriptions to a complete, customized IT
offering targeted mostly at large enterprises [6]. Note that combining GSM with
voice-over-IP office telephony Fujitsu Services is able to challenge the traditional
operators on their hometurf with a full voice telephony offering to enterprises. Thus in
addition to the differentiation strategy, they apply the focus strategy.

3"Y



ÚY   
has combined three strategies of our model:
6Y they offer the low price services directly to their customers,
6Y provide differentiation with content services, and
6Y resell their network capacity to focused brand operators.
 ÚY They have won over 300 000 subscribers from the incumbent operators within two
years, resulting over 6% market share. Saunalahti also bundles their mobile
subscriptions with their fixed broadband Internet subscriptions. As an MVNO enabler
they provide services (SIM cards) for two brand operators. Ä  and  
subscriptions are so called brand operators, applying truly the focus strategy. They
offer mobile communications services fully provided by Saunalahti to the existing
customers of Hesburer (a hamburger restaurant chain) and Passeli (an accounting
management software).


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c 

c
 

MVNO business relies on their ability to fulfill the unmet needs of the market which
traditional mobile network operators (MNOs) either don¶t serve adequately (e.g. lower ARPU
customers) or don¶t find attractive enough (e.g. niche customers like immigrants with low
spending capacity).
MVNOs segmented approach offer the MNOs to target specific segments with distinct needs
through incremental wholesale revenues while being able to focus on high-value customers.
Today, most of the western European operators are open to MVNOs and/or have a wholesale
strategy. On their part, MVNOs have been largely prepaid in nature where they face least
resistance from mobile operators and target the niches that host operators are under serving.
Mobile virtual network operators (MVNOs) have had a mixed success story in Europe so far.
While there are MVNOs which have captured significant customer base with their value
proposition, there are others who have not done as well in spite of an attractive value
proposition.
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Understanding of these is crucial to evaluate how the MVNOs are likely to evolve in the
future.
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MY If 80 to 85% mobile penetration is considered adequate for MVNOs to make an entry
into the markets, what then dictates the different level of activities in the different
markets?. It is important to understand the composition of the market. Which are the
segments that are underserved or left out and why?. What are the needs that are not
met and what it will take to meet those needs?.
A case in '
   :; targeting the large Turkish community in Belgium
and Germany and bringing attractive tariff plans for calling back home and within the
community.
MY In a highly competitive market, excess capacity with the mobile operator with the
least market share sometimes becomes highly relevant to forge favorable partnership
as a host operator for the MVNO which is first step towards entering the market.
Example-,-$ +
 realized that it could not gain market share as fast as a
traditional MNO and rather complemented its position with an MVNE proposition
and now has most of the market share of MVNO and with high margins.
MY Role of the regulator not only impacts the successful entry of the MVNOs into a given
market but also becomes a deciding factor in their immediate and long term success.
EU wide directives recommend all national regulators to increase competition in the
telecom space. The push for MVNO however needs to be supported with action on
the ground in areas where MVNOs are dependent on mobile operators. Example:
players have been interested since 2005, it was not until 2008 that first MVNO has
been launched in Ireland by Tesco Mobile, UK based MVNO, interestingly as a joint
venture with a mobile operator.



  
   
 
MY Many different flavors of MVNO are currently entering or have entered the European
market leveraging the possibilities to weave innovative value propositions around
technology and capture niches for themselves. Technology has enabled fresh thinking
to come up with innovative data plans that allows the media companies to get more
bang for buck from their assets and foster loyalty amongst its audience. For instance,
37c<0
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 MY Banks are increasingly realizing that mobile may well be the next de-facto contact
point with its customers and are beginning to offer mobile services to their customers
with innovative incentive schemes. Rabo Bank became the first bank to successfully
launch MVNO in Netherlands. Its lead has been followed by other players like
Bankinter in Spain, MBank (owned by the BRE Bank) in Poland and more are
expected to follow.
MY The most important differentiator has been the ability of the MVNOs to ensure
exclusive access to their strategic assets.

MY    


  
 
 
  
 

   


  "
 
 ,  
 c0   0 for example is strong on market orientation,
positions as low cost and couples it with operational efficiencies.

OY If the assets can be acquired or replicated by others then the competitive advantage is
lost. This partially explains the long tail as the customers get distributed with too
many players offering more or less similar value proposition after a certain time.

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MY Most successful MVNOs are very secretive of their operational processes like MNOs.
Building efficiencies into the process of Sales, Customer Service, and Back Office
leads to incremental gains that may be passed as benefits to the customers.
Additionally, intelligent agreements with top-up channels, logistics and third party
providers for SIM become crucial as volumes grow.

For instance, in a push model of business, having attractive commissioning systems

for the sales channel partners becomes crucial especially when they are non-exclusive.
In a low margin business where operating margin is between 5 to 15% percent, it
becomes very important to build the differentiation not only in the positioning but
also in the operational model.

MY It is also crucial for the MVNOs where operational processes are relevant, to identify
what can be outsourced and what needs to be in-house.
For example, a low cost MVNO does not necessarily mean outsourcing everything.
On the contrary, it may actually increase cost as the margins are shared with the
service providers. Also, if the processes can be shared across other businesses of the
group than it makes sense to adapt that for
the MVNO business.

MY  
 


 
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 " Price competition for low cost MVNOs demands quick reaction.

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MY On one hand, the subscriber acquisition and retention costs have an upward pressure
where as on the other the revenue growth is slowing down. 
  
      
        c -      
      

MY Gaining     
 is the second way to grow for the MVNO players.
Growing into the markets with similar value proposition or different value proposition
in order to leverage the existing know-how and set up is seen as a logical way
forward.
Examples:
s


is already expanding pan-Europe. /$ has a pan-European strategy to
launch MVNEs across selected countries in Europe. It is already active in Germany,
Netherlands, Belgium and Spain while France is underway. In fact, the new brand of
MVNOs are launching with a pan-geographic business plan.

MY Differentiate on product or price

MY Set up good distribution channels
MY Target specific customer segments
MY Ensure solid service capabilities
MY Have a strong brand
MY Use MVNO venture to Cross-sell other products

c>s



We have categorized different MVNOs in Latin America on the basis of their behaviour to
customers as follows in the table below:

 csIFESTYLE
‡ MVNOs focused on niche markets
‡ Niche defined by demographic criteria, such as sex, age,
behavior, and lifestyle
‡ Price not being the main selection criteria, despite its
Lifestyle importance HELIO
 ‡ MVNOs focused on niche consumers from foreign
nationalities
Ethnic ‡ Main selection criteria - Price
‡ Differentiation Factors - Lower tariffs, native speaking MOVIDA
language, and specific content

‡ MVNOs focused on aggressive tariffs

‡ Most Decisive Factor - Price
Discount ‡ Differentiation Factors - Lower tariffs and basic and low-
cost handsets TESCO
Mobile
‡ MVNOs focused on business (B2B)
‡ Main Selection Criteria ± Specialization (despite the
Business importance provided by SMBs to price) KORE
‡ Differentiation Factors - Special services for mobile data TELEMATICS
(M2M) and VAS.

‡ MVNOs based on publicity

‡ Price is not relevant, as traffic and data are free according
Sponsored By the publicity received. BLYK
Advertising ‡ Differentiation Factors - Contents and handsets offered to
subscribers

sÄ,s

‡ It was a joint venture between SK TELECOM (South Korea) and EarthLink (USA). It was
launched in the USA in May 2006.
‡ Focused in the young segment (18-32 years), for affluent clients and high-tech profile.
‡ Value Propositions - Innovative handsets, advanced content, app stores, and direct MKT
‡ Alternative Media - verbal communication, sponsor, cable TV, and magazines
‡ MySpace ± Helio was the first operator in the USA to allow users to interface with
MySpace.
‡ Revenues in 2007 -$171million, Loss - $327 million.
‡ ARPU (service) - Around $80.00 per month
‡ Helio was sold to Virgin Mobile USA in 2008 with 200,000 subscribers.
‡ Virgin Mobile USA sold it to Sprint-Nextel in November 2008.

‡ Five stores (Denver, NYC, Palo Alto, San Diego, and Santa Monica) were launched.

‡ Value proposition included an exceptional retail experience.

*Ä*,*¢+?

‡ Weak value proposition, as ³innovative´ handsets were obsolete in South Korea and USA.
‡ Low scale of clients, as there were other companies such as Boost Mobile, Amp¶d Mobile,
and Virgin Mobile with the same focus
‡ Difficulties to leverage the communication and marketing investments after negative
financial results
‡ Lack of a wide distribution network (only 5 cities in 3 states)
‡ Content similar to cable TV offerings, with the only difference being the mobility appeal.
‡ The Small base of clients, resulting in low bargaining power with partners such as Verizon
and Sprint, which resulted in less attractive plans

,-c#

‡ It was established in 2005 in USA by Cisneros Group of Companies from Venezuela.

‡ It focused on cities with significant Hispanic population, such as Dallas, Houston, Austin,
Miami, Los Angeles, San Antonio, and Phoenix.
‡ The target segment was 40 million Hispanics.
‡ Distribution network included the important centers of Hispanic circulation, such as Wal-
Mart.
‡ Aggressive tariffs for local, SMS and international calls for Mexico and Caribe.
‡ Prepaid services were offered to consumers with low/ limited credit in USA.
‡ Spanish language in all communication, assistances and handsets systems.
‡ Special content, such as soup operas, news from Hispanic countries, and football news, was
offered to Hispanics.
*Ä*,*¢+?
‡ Though it had a good value proposition (aggressive tariffs and Spanish language services),
other strong competitors (such as Tracfone) and mobile network operators (MNOs) offered
Spanish language services as well.
‡ It had a very low profit margin
‡ It had a limited offer of mobile plans, without unlimited minute plans, and varied tariffs for
special hours, and small portfolio of handsets.
‡ Special content alone could not sustain its competitive advantage.


# -, c.s,

‡ Tesco is the third-largest retailer globally.

‡ It generated revenues of $38.1 billion 2008, with a net margin of 6.0 percent.
‡ Until February 2009, Tesco had 2,306 stores in the United Kingdom that were set up by six
different BUs
‡ It operates in 15 countries (China, Japan, the United States, and so on) with more than 2,420
stores.
‡ Tesco held a share of 30.4 percent in the U.K. retail market in 2008.
‡ It has business in many other sectors such as gardening, bank, electronics, fuel, IT, and
telecom.
‡ Tesco was the first retailer in the world to offer online shopping experience to its customers
in 1984.
‡ It launched its mobile virtual network operator (MVNO) in July 2005.

Tesco Mobile is a joint venture between Tesco and Telefónica O2 (50/50). 02 is Tesco¶s
Mobile MNO network provider. In December 2008, Tesco Mobile¶s client base reached 1.7
million in England. It offers low tariffs for voice (£ 10p/minute) and SMS (£ 5p/message). It
has a number of sales channels such as retail network, Internet, and call center. It expanded
operations to the Republic of Ireland and Slovakia.

*Ä*,¢+Ä?
‡ Strong Value Proposition - Aggressive tariffs and quality, supported by brand reputation
‡ Experience in launching and managing products and services under its own brand name
‡ More Tangible Advantages - Free SIM card, tripled credit recharges, and unlimited plans
‡ Multiple Points of Interaction with Clients - Many retail outlets, Web site, call centers, and
ATMs
‡ Loyalty (Tesco Clubcard) - Handsets purchased and expenditures made through credit cards
result in addition of loyalty points.
‡ Wide Range of Voice Services Offered - Prepaid, postpaid, pay-as-you-go, roaming and
international calls
‡ Broad portfolio of handsets, including high-end models such as iPhone
‡ Importance provided to number portability in its advertising campaigns
‡ Mobile marketing and advertising being considered strategic for the future.
DISCOUNT ± TESCO MOBILE (Contd...)

. @/¢,,s,c 

‡ It was established in 2003 in the United States targeting the mobile data market.
‡ It provides services to 93 percent of the U.S., Canadian, and Caribbean population. It offers
roaming services in 220 countries.
‡ It offers a broad portfolio of services, based on mobile data, which also include VAS such
as surveillance and mobile voice.
‡ It is a complete MVNO, as it manages the entire chain ranging from the commercial and
billing process to network monitoring with own NOC.
‡ Main services include vehicle tracking, payment systems, telemetry, VPN, local voice,
national roaming and international calls.
‡ It has customized solutions for verticals such as healthcare, security, utilities, industry,
government, finances, and environment.

*Ä*,¢+Ä?
‡ Strong Value Proposition - Technical specialization in mobile data and great client
assistance
‡ Products portfolio and a verticallized commercial approach reinforce its value proposition.
‡ Only a few competitors have witnessed success in this sector.
‡ Low service penetration results in rapid growth of the mobile data market.
‡ On-demand pricing of mobile data services (pay-as-you-use).

  .-.s:/

‡ It was established in Finland in January 2006. It operated in the United Kingdom from
September 2007 to August 2009.
‡ Before February 2009, it offered 43 minutes and 217 free SMS monthly without cumulative
credit.
‡ Additional minutes cost £24p/min (against £10p/min from Tesco), and additional SMSs cost
£10p/msg (against £5p/msg from Tesco).
‡ From February 2009, tariffs were raised for voice calls (£24p/min) and reduced for SMSs
(£8p/msg).
‡ From them on, credits are getting accumulated to the level of £15,00 per month, and they
are being used not only for voice and SMS but also MMS and data.

*Ä*,*¢+?
‡ As of September 2008, it had 200,000 clients in the United Kingdom, which is considered
insufficient for a direct communication.
‡ It had expensive additional tariffs, which stimulated clients to change SIM cards as the
credit was near to finish.
‡ It had a very basic portfolio of handsets and services.
‡ Economic downturn in 2009 had a negative impact on sponsors, and the company decided
to change its strategic orientation.
‡ Currently, Blyk has partnerships with operators worldwide to develop mobile advertising.
/ 
 

OY Leverage is essential for value creation

An MVNO is no different to any other business and must have a source of
(sustainable) competitive advantage if it is to create value for investors. Competitive
advantage is achieved by successful MVNOs through effectively leveraging their
existing assets to generate customer growth with low customer acquisition costs. It is
this leverage that provides the basis for a good business ³story.´ MVNOs typically
seek to leverage the following assets:
6Y Existing customers ± it is easier to sell a new service to existing customers than it
is to win entirely new customers (e.g. Tesco)
6Y Brand ± to be successful the leveraged brand must drive the purchase of mobile
telephony (e.g. Virgin)
6Y Distribution ± existing channels to market will help reduce the cost of customer
acquisition (e.g. Virgin, Fresh Mobile ± CPW)
6Y Content ± for some, mobile provides simply another media for the distribution of
existing content (e.g. using the mobile to deliver advertising ± Blyk, music
downloads Radio-Formula, France)
6Y Convergence ± bundling of multiple communication services is increasingly
common and has been shown to increases customer loyalty (e.g. Tele2, BT
leveraging customers and fixed assets)

OY Select the appropriate MVNO network model

OY A potential MVNO may first consider entering as a Service Provider or ³thin´ MVNO
to test the market before investing further
OY Securing the optimum network deal is fundamental to the success of the business but
so too is managing customer acquisition costs and minimising fixed costs
OY Select the right network partner
OY Negotiate the optimum wholesale agreement
OY Select the right vendor strategy
OY The success of the MVNO launch and the long term health of the business depend
critically on making the right choice of suppliers for equipment, systems and services
c
c 
  


    c


 Availing license is Most of the players The process for

 expected to be possess 2G licenses. getting requisite
challenging However, getting licenses is less
a 3G license is challenging for
difficult MVNOs
  Services can be Existing operations With ready
  rolled out of acquired operations, services
through green - field company can be can be rolled out
rollout or leveraged quickly
tower - sharing
agreements
   Greenfield rollout Acquisition would Targeted rollouts
would involve involve high depending on
high CAPEX/OPEX to investments as the investment level
set up candidates are can be
network and currently priced at a carried out
distribution premium
 The high level of Acquisition target Risk is limited by the
investment can be possibility
required, rollout overpriced of scaling up
obligations and operations as per
exit barriers would requirement
be a source of risk
  Overseas entrants Overseas entrants Overseas entrants
   can fully can fully can fully leverage
leverage their brand leverage their brand their brand, however
and and network
operational expertise operational expertise control is limited by
operator

   Low Medium High










   c




       c


 
 ͻ MVNOs to own individual license with MVNOs are free to have
service area same as that of the parent selective rollout within the
MNO licensed circle of the parent
ͻ No rollout obligations MNO
! ͻ Liberty to enter as a full, intermediate or Reduced rollout costs for
c thin MVNO MVNOs
ͻ Scope of service is the same as an MNO
while regulation, licensing and entry fee
requirements are much lower
 ͻ Parent MNO to have no bearing on prices MVNOs free to decide on
"  ͻ MVNOs to be directly responsible for their pricing structure.
#$ customer service, QoS, etc. MVNO will need to push
for comprehensive SLAs with
MNO
c
%c
 ͻ No limit to the number of MVNOs MNOs will have higher
 &  attached to a MNO bargaining power as MVNOs
ͻ An MVNO can get attached only to one will be locked-in to the host
MNO in the same service area operator
ͻ MVNO license subject to continuing
relationship with MNO

'  ͻ 6-months notice to be given to MNO, MVNOs will need to be

customers, DoT and TRAI selective about regions of
ͻ MVNO will be disqualified from obtaining service rollout
fresh licenses in the same service area
ͻ PBG shall be forfeited and FBG to be
returned after dues are settled
c
  

Selection of Operating Model
Operating models would largely be defined by the services and applications being provided
by the MVNO. For example, an MVNO providing ILD and international roaming services
might be compelled to go for a full MVNO model, as it would need to negotiate independent
termination and carrier charges and also route its calls differently from its host operator.
Nevertheless, MVNOs should try and maintain lean operations by outsourcing most
functions to MVNEs, while continuing to build capabilities such as distribution and customer
care, which could enable them to differentiate their services. By opting for the ͞thin͟ model
the players would be able to break-even with a lower subscriber base. However, for higher
NPV, they should have necessary agreements in place with their host operator allowing
them to move to an intermediate/full MVNO model, once they have achieved a critical mass
and are confident about the long-term sustainability of their venture.

Selection of MNO
MVNOs will need to select their MNO partners carefully, as regulations make it difficult for
MVNOs to change their MNO partner once they have entered into an agreement. With
regulation mandating that MVNOs will have to maintain required levels of QoS, network
coverage and availability of spectrum will be the prime criteria for MNO selection.
Additionally, the MVNO should ideally look at partnering with operators with whom there is
minimum overlap of offerings, so as to have a long-term sustainable relationship. However,
wholesale rates will be critical in the choice of MNO partners as they will define the long-
term profitability of the MVNO venture.
Although proposed regulations allow for different MVNO relationships in different circles,
due to cost and operational issues it is likely that MVNOs would want the same partner
across all circles they operate in. Since regulations are likely to result in lock-in with an
MNO, MVNOs should attempt to negotiate deals in which operators have a stake in the
success of the MVNO. This will ensure better support and long-term cooperation from the
operators. This can be achieved by providing equity stakes to the MNO or by negotiating
payment terms depending on the MVNO performance.

c
  

ðomprehensive Wholesale Strategies
Because of the number of players in the market, we foresee a lot of competition in the
wholesale market as well. The new entrants into the market are likely to be the most
aggressive in this respect, with their wholesale strategies geared towards quickly gaining
market share and increasing network utilization through the MVNO model.
However operators can still strike financially lucrative deals in spite of having to give deep
discounts of up to 50% of retail prices for their wholesale segments21. Operators should
attempt to sell other network resources such as HLR22 at higher margins and provide in-
house MVNE solutions, so as to capture a greater share of the value created in the system.
MVNO Partner Selection
The key parameter for the selection of partner MVNOs will be their ability to effectively
target customer segments that the operator is unable to serve efficiently. Additionally there
will be operational and financial parameters such as spare network capacity and long term
financial viability which are also likely to be important considerations.
However, in the Indian context, MNOs should not restrict their MVNO relationships only to
players with vastly different propositions, as prospective MVNOs would always be able to
find partners who provide competitive offers. Instead, they should try and build up a multi -
proposition MVNO portfolio, so that churn in their target segment results in customer
acquisition on a partner MVNO, allowing customers to be retained on the network. In
conclusion, the introduction of the MVNO model in India will be an opportunity for new
players as well as existing operators. MVNO prospects that target the correct market
segments, leveraging capabilities in service development, distribution and brand will be able
to build up viable businesses. For long -term sustainability of these MVNOs, strategic
decisions pertaining to the selection of MNO partners and negotiation of pric e for wholesale
minutes will be critical. MNOs too should view the development as an opportunity to unlock
additional revenue streams through the sale of wholesale minutes and the provision of a
range of complementary services to these players.

o     o  

(& c


 )   MNOs would want MVNOs in circles
where they have excess capacity
   Control over MVNO operations will allow
c
   operators to maintain competitive
advantage
"  $  MNOs would want MVNO partners to target
    segments they are unable to serve
competitively
"    MNOs are likely to be keen to have MVNOs
 
'   on the network which cater to segments
which require specific expertise
  MVNOs might provide operators with
   c
  additional revenue stream by subscribing to
additional services
$* Operators are likely to be favorable to only
"  those MVNOs which they believe have long-
term financial viability
   $ c  c


Vouth Segment
The youth population in India, comprised of the 15 -24 year age group, stands at about 224
million and is expected to grow further to around 238 million by year 2015. With more than
27 million youth belonging to households with an average annual income of $15,000 and
above, this is likely to be a segment which MVNOs can target aggressively. One of the
estimates shows that the market for mobile services for youth is likely to be a US$15.4
billion opportunity by the end of 2010.
MVNOs can potentially adopt a three-pronged strategy for this segment: creating brand
appeal amongst the youth, subsidizing trendy handsets and offering customized tariff plans.
MVNOs should try and create brands targeted specifically at the youth segment, similar to
what Virgin Mobile is currently attempting to do through a brand franchisee model with
Tata Teleservices. Additionally, they could provide customized voice and data plans,
tailoring them to specific youth calling patterns and their inclination to use data services.
These MVNOs can also look at bundling trendy handsets with their offers, as the bundled
handsets currently in the market are fairly basic with limited functionality.

Premium Segment
Operators in India have positioned themselves as mass market players, thereby depriving
potentially high-end customers from any sense of exclusiveness. The services currently
offered lack premium offerings such as preferential customer care, higher guarantees on
QoS, premium bundled handsets and other personalized services.
There is a sizable population in India which could potentially be targeted with such premium
services. There are currently more than 7 million people in households with annual income
between US$23,000 and US$45,000. This segment is likely to be attractive for the higher
ARPU it promises. For example, the ARPU from the more expensive PDA users in the country
is 11 times the ARPU from a CDMA user. Estimates shows that the market for this segment
to be worth around US$2.5 billion by 2010.

Enterprise Segment
The spending on mobile communication for enterprises in the Indian market is expected to
grow to US$2.7 billion by the year 2010. A number of these enterprises have requirements
in the telecom space that are not core operator skill sets, such as managed mobility, M2M
services and mobile enterprise applications. ICT service providers could launch MVNOs on
similar lines as Embarq and Earthlink, which target the business and professional segment,
and provide additional enterprise services for differentiation. Particularly, global telcos
present in India in the enterprise ICT services space could expand their service portfoli o by
offering enterprise mobility services as MVNOs.

Heavy Data Usage Segment

The data and content market in India is still in the process of maturing. As of Q2 07, only 8%
of the total revenues came from data services in India, while the corresponding figures for
the more mature UK and US markets were 25% and 14% respectively. However, the market
is expected to grow at around 44% CAGR between 2007 and 2010, to become worth around
US$2.7 billion. MVNOs targeting this segment can look at addressing the current
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