News for januar 2011

The State of MVNOs in Italy

After MVNO News just published the results (in Italian) of their annual survey about MVNOs in Italy, I want to look closer at how the Italian MVNOs are doing, and in some cases compare it to a similar survey MVNO News published for 2009.

The survey is based on people who have visited so the sample is clearly biased towards people interested in MVNOs, and the patterns that emerge are somewhat predictable:

  • MVNO subscribers are most likely to be men, between 31-40 who has PosteMobile as their preferred MVNO
  • It is more likely that the primary SIM is from an MVNO (59% versus 33% in 2009)
  • Price on voice tariffs are still the main reason customer’s choose to switch to a MVNO

While MVNOs might seem like they are doing well, all the numbers are relative to each other and the most essential question of average revenue per user (ARPU) is not given so it would be risky to conclude that things are going the right way for MVNOs in Italy.

ARPU is particularly important in Italy. Because Italy boasts one of the highest penetrations of mobile subscriptions in the world. At around 150% one out of every two Italians have two SIM cards and as an operator the value is in having your name on the primary SIM. Therefore, the truth is that most MVNOs are only customer’s second SIM, and it is difficult to be very optimistic as an Italian MVNO. While PosteMobile is significantly dominating the picture in terms of market share, their ARPU is much lower than their MNO competitors and they are therefore far from financially sustainable. In 2009 PosteMobile had an ARPU around €8. This is around 60% lower than their MNO competitors’ and also 50% lower than the most successful Danish MVNOs. PosteMobile has lost a boat load of money since they started (a boat loaded with more than €50 million) and at the same time they are less effective in terms of revenue per employee than their Scandinavian counterparts. So to put it very simply, if you were an investor you should short the entire Italian MVNO industry.

An interesting question for an Italian consumer would also be: “why should I choose an MVNO as an operator?” Except for bundling with their mother companies activities they don’t offer clear advantages in terms of price, value added services or customer service so in most ways I understand the Italian consumers and I don’t see these trends changing anytime soon.

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Posted: januar 10th, 2011
Categories: Italy, telecom
Comments: 1 Comment.