With the Mexico MVNO market growing year-on-year, the IFT has released a comprehensive report and survey on this buoyant market and its defining characteristics. In this blog, we’ll be highlighting some of its key findings and exploring what the future might look like for the Mexican MVNO market with increasingly more companies in the region turning to Telecom-as-a-Service (TaaS) to drive their competitive edge.
Highlights:
- Mexico’s MVNO market grew by 312.7% from 2020 to 2022
- By the end of 2022, Mexico’s telecom market consisted of 135.9 million lines, with Telcel remaining the country’s largest operator by market share
- The Average Revenue Per User (ARPU) for Mexico’s MVNOs is $68MXN ($4) per month
- 61% of the MVNOs surveyed in the report rely on the Altan network, with the use of Altan’s network increasing by 18% from 2020 to 2023
- The use of MVNAs and MVNEs is low in Mexico, with MVNOs in the region preferring to maintain greater control over their operational and commercial processes
- One of the biggest challenges for MVNOs is identified as traditional operator wholesale prices, with 29% of those surveyed reporting increased business costs as one of their main concerns
- 83% of the MVNOs surveyed see the use of BI, AI, and ML in enabling them to deliver more personalized solutions to their customers in the years ahead
A Thriving MVNO Market
The Mexican MVNO market, led by Bait, a Walmart owned MVNO with 11.8 million active users, is thriving and continues to inject competition into the region’s mobile market through lower prices and tailored customer services to mobile subscribers.
Mexico’s MVNO market grew 312.7% from 2020 to 2022, with on average 53 new MVNOs entering the market between 2021 and 2022 alone. A stark contrast to the 6.5 new MVNO entrants between 2014-2016.
These MVNOs have been delivering new services to niche customer segments, improving the overall competitiveness in the Mexican telecommunications market. 79% of these MVNOs believe they are more agile than traditional mobile network operators, giving them a distinct competitive edge through their lower priced plans and free services. 60% of MVNOs surveyed conveyed that they would be continuing to add additional services and lowering costs further for customers throughout 2024.
Market Opportunities for MVNOs
The IFT highlights that MVNOs see significant opportunities from new technologies like eSIM, IoT/M2M, and 5G, with 79% of those surveyed believing that the use of eSIM could improve their commercial offer substantially. eSIM, where a physical SIM card is replaced with remote connectivity, could open up new revenue from onboarding traveler clients in their home countries and reducing costs through a reduced physical SIM production line.
While not their top priority when it comes to services offered, MVNOs can still see the potential in IoT/M2M and FWA services, with IoT and M2M services predicted to grow in popularity over the next 3 years.
Mexican MVNOs are also looking ahead to how business intelligence (BI), artificial intelligence (AI), and machine learning (ML) can help them, with 83% of surveyed MVNOs believing BI, AI, and ML will help them deliver more personalized offerings to users in the years ahead.
Macroeconomics
Despite a growing and competitive market, Mexican MVNOs are still facing a myriad of challenges when it comes to service reliability, business model development, and high costs.
29% of the MVNOs surveyed report increased business costs as one of the biggest impacts to their current operations, followed by difficulties in delivering SIM cards (16%), and decreases in the number of users (10%). Other areas of fragility come from failures in wholesale networks, access to sales points, the cost of terminal equipment, lack of investment, and a decrease in the average top-up per customer.
Opportunities for TaaS
As the IFT has identified, the Mexican MVNO market is flourishing, however MVNOs are still concerned with high wholesale costs, unreliable network connectivity, and the general lack of investment in telecom in the country- and this isn’t just synonymous with Mexico, this is being felt across the world.
Telecom-as-a-Service (TaaS) is gaining significant traction in Mexico as businesses like Rappi, Mercado Pago and Coppel, look to overcome the hurdles associated with traditional telecom and offer connectivity services to their customers quickly and efficiently. With TaaS any enterprise, brand or individual can manage and deploy their own network in real-time, without the need for telecom expertise and without the cost, time constraints, and complexities that are typical when setting up a MVNO.
MVNO’s built using TaaS can be set-up in as little as a few hours and can offer flexible plans that have never been seen before by consumers. Not only does TaaS give businesses access to a multi-carrier platform and impressive plan customizations, but they have an abundance of first-party customer telecom data at their fingertips -understanding customers and building more meaningful and fruitful customer relationships has never been easier for MVNOs.
With the average revenue per user (ARPU) at just $68MXN per month, Mexican MVNOs have a clear opportunity to leverage this first-party data to up-sell and cross-sell to customers based on specific user behaviors, helping to increase their ARPU, CLV (Customer Lifetime Value), and NPS (Net Promoter Score) in the months and years ahead.
Mobile X’s AI, enabled by OXIO, makes it possible for users to first try the service and then understand how much data they need before picking a plan that works for their needs. This same innovation is available today in Mexico as well, to help reduce the price of plans and compete in an already competitive market.
With TaaS, the IFT will likely be reporting on a much larger and more competitive MVNO market in 2024 and beyond, through reduced barriers to entry, increased network reliability and flexibility, and enriched customer experiences.
You can read the full report and survey by the IFT here (in Spanish only). The IFT (The Federal Telecommunications Institute) is an independent agency charged with the regulation of telecommunications and broadcasting services in Mexico.
