MVNOs versus MNOs: seven areas where customer behaviour is significantly different

The 11 topics showing major differences span seven areas:

• Spend on mobile connectivity
• Churn
• 5G adoption and upgrade intent
• Interest in refurbished smartphones
• Preferences for device sales channels
• Video services
• Travel eSIM

This article focuses on the first three.

Spend on connectivity shows the biggest gap: device and 5G upgrades should help

In most of the countries analysed, more than half of MVNO customers fall under the category of low spenders (for MNOs, 29% of customers are low spenders). This translates into ~30% lower spend on mobile connectivity (therefore lower MVNO ARPU).

For MVNOs, converting 20% of their low spenders into medium spenders could generate a 14% ARPU increase (on average across the countries analysed). As around 20% of the low spenders will replace their phone in the next 12 months, MVNOs should focus on helping customers upgrade to medium- or high-end smartphones, including flagships (where there is a major gap in adoption).

However, many customers may not be willing to purchase high-end new devices. As such, promoting pre-owned refurbished phones (where there is higher interest from MVNO customers compared to MNO customers) is important. This should help boost adoption of 5G smartphones, bringing in higher-ARPU customers.

Churn is the second biggest challenge, but it’s not insurmountable

MVNO customers show higher churn (19%) compared to MNO customers (13%). Higher churn applies across all age groups with the difference being more marked for younger adults. Getting a cheaper mobile plan is the outstanding driver of MVNO churn. Beyond cost, network-related factors (e.g. coverage, speed, 5G) are a more prominent churn reason for MVNO customers compared to bundles (e.g. getting content or services bundled with connectivity) across all ages.

Retention strategies should prioritise 25–34 years old consumers. This segment shows the highest churn for MVNOs (30%) and is also the segment spending the most on mobile connectivity, making retention a priority. As this age group shows the lowest price sensitivity, MVNO retention strategies should focus on some of the non-price related factors that drive churn. These include (in order of relevance): offering 5G plans, higher network speeds, and better customer service.

Enthusiasm for 5G is lagging, but there are routes to catch up

Compared to MNOs, MVNOs have a smaller share of customers on 5G (11 pp difference) and a lower consumer intent to upgrade (9 pp difference). On the positive side, willingness to pay extra when upgrading to 5G is 5% for both MVNO and MNO customers.

Customers who are 18-44 years old and prolific users of digital services/content should be the priority target for 5G upgrades, as they are more likely to demand bigger data allowances or even speed-based tariffs (two important 5G monetisation factors). This category accounts for 20-30% of MVNO customers and is a high-spend group; migrating more of them to 5G should boost ARPUs. Also, MVNOs should explore FWA opportunities, as FWA is the most appealing 5G use case for MVNO customers (beyond mobile connectivity).

Beyond the first three

Devices. MVNO customers are more interested in refurbished phones (compared to MNO customers), and this can help boost 5G adoption. MVNOs can offer refurbished 5G phones (either directly or as a distributor partner for third-party retailers) backed by measures like attractive handset financing, good device warranty, insurance, and robust after care support. Linking them with attractive 5G connectivity offers is also important. In general, for any MVNO device strategies, online channels are essential as MVNO customers tend to purchase smartphones online.

Video services. MVNO customers are less interested in traditional pay TV whereas OTT is more relevant. Targeting OTT/mobile bundles requires a segmented approach though (18-34 years old should be the main target). Also, bundle strategies should reflect MVNO customer preferences (e.g. Prime Video slightly more sought than Netflix, and ‘standard with ads’ tier). MVNOs lacking scale to form direct partnerships can benefit from vendor platforms.

Travel eSIM. MVNO customers rely more on non-telco providers (e.g. Airalo, Holafly, Ubigi) compared to MNO customers. As travel eSIM is a revenue threat, MVNOs should increasingly explore ways to make their roaming offerings more compelling. Pricing is not the way to go. Instead, MVNOs should stress differentiators such as brand value, voice capabilities and customer service, focusing on end-to-end user experience.