Interview with Allan Rasmussen, Industry Expert and Managing Director of Yozzo
Allan Ramussen tells us in detail about the status, trends and opportunities in the Southeast Asian MVNO Market, as well as how Consumer eSIM is faring and what he sees as 'the next best thing' in the market.
What is the current status of MVNOs in the Southeast Asian Market? And what are the trends and opportunities?
See below for an answer broken down by country
In Vietnam, both the government, two of the four operators, large enterprises and consumers are showing an increased interest in MVNOs and thereby forming an uptrend.
The uptrend comes in parallel with Vietnam becoming one of the fastest growing digital economies in Southeast Asia and its aim of becoming a high-income economy by 2045, focusing on digital economy.
The Ministry of Information and Communications (MIC), has recently added a new wholesale policy to create a more transparent and easier legal corridor to help MVNOs negotiate wholesale agreements. The goal, when adjusting and amending the regulations is to promote the wholesale market, create a new level playing field, and promote the development of MVNO businesses in Vietnam.
Revenue from the mobile network operators’ traditional services has seen a decline, but there are new revenue streams for growth in the industry and the two mobile network operators, Mobifone and VNPT are actively pursuing more MVNO partners.
Among the new MVNOs launched recently in Vietnam are large corporations taking advantage of the uptrend by using their existing assets such as brand recognition, existing customer base, loyalty programs, financial services, applications and distribution channels.
By way of example, the latest MVNO to launch (VNSKY) belongs to VNPAY, a financial technology (Fintech) and service company, providing electronic payment solutions in Vietnam.
VNPAY’s apps sees 15 million+ monthly active consumers transfer money, pay bills, top up mobile credits, book bus tickets, or shop for groceries. The company also runs VNPay-QR, an interoperable cashless payment network that serves 22 million users and over 150,000 merchants.
Masan Group Corporation, one of the three largest private sector companies in Vietnam (in terms of market capitalization), acquired 70% of Mobicast JSC in September, 2021. With Masan Group’s acquisition, Mobicast’s MVNO was rebranded from Reddi to Wintel.
Wintel is implementing a “All-in-one” digital experience strategy, targeting tens of millions of customers, by using other member brands such as: Phuc Long (coffee brand), Techcombank (financial services), and WinMart (retail chain), in the Masan Group ecosystem.
As of June 2023, the number of active subscribers connected to the three MVNOs (Itel, Wintel, and myLocal), was 2.65 million, accounting for 2.1% of the total number of subscribers in the country. The fourth MVNO (VNSKY) was launched on May 23, 2023.
The numbers represent an increase of 410,000 subscribers (+18.30%) in just two months, since the end of April 2023 release from MIC where the subscribers stood at 2.24 million, accounting for 1.74% of the total market.
Despite these positive results, the MIC is looking to further support the development of MVNOs in the country to achieve better results and there are currently at least a handful of new MVNOs in the making.
A barrier to entry, is that Vietnam currently does not allow Full MVNOs. This adds a limit on the expansion option of the current MVNOs and the control of their own business, as well as enterprise focused MVNOs/Private networks.
The combination of regulatory support, digital economy targets, the interest mobile network operators to partner with MVNOs and the entry of large corporations/conglomerates as MVNOs has created a uptrend in a market that had been at a MVNO stand still for a long time.
Speaking of an MVNO stand still for a long time – Thailand is still on standby. Despite 65+ MVNO licenses awarded, nine have dared to launch without the necessary platform, regulatory support and framework - and only four MVNOs remain more or less active.
The market is in dire need of regulatory actions after years of only awarding MVNO licenses without following up. The merger between two of the big three mobile operators in March this year has created a duopoly with no competition and a market screaming for MVNOs both on the consumer and enterprise side.
Thailand’s digital transformation and economy has - and will slip further behind as the merger has created a huge bottleneck with only two mobile operators as gatekeepers for the whole country.
In addition, the shareholders of the two gatekeepers also have vested interest in other verticals, which has naturally caused competing enterprises to become reluctant to have their data taken care of by the competition.
In their eagerness to create bottom-line results the two operators are heavily focused on the large enterprises leaving the backbone of the country = Small medium enterprises (SME) high and dry with standard discounts on connectivity offers.
The country is highly segmented with a range of ethnic minorities, religions, culture, politics, metro/urban/rural, large number of expats and nomads, millions of migrant workers, large youth movement, growing population of elderlies, high/low-income, etc., Yet, all these segments are connected by only two mobile network operators with the same one-size-fits-all offer.
With a new government just sworn in, the country is coming out from a 10-year vacuum and needs to catch up quickly to bring the economy back. Doing so means that both the middle-class, but more so, the low-income earners, will be given more to make sure they can be part of the digital economy.
With the geo-political situation, Covid-19, and the inflation we are seeing a range of companies looking to move their factories from China to either Thailand, Vietnam, Indonesia or Malaysia. Those factories will need more than the standard connection offer from mobile operators, and as such MVNO and/or a hybrid MVNO/Private Network setup is on the list of opportunities in three of those markets - not so much in Indonesia, as they still don’t have any MVNO policy.
The former government has spent a huge amount on promoting 5G in Thailand and although they did win the sprint, they are far behind in the marathon compared to other markets. Again, the lack of competition in the market has not brought new innovative services nor packages to the country, instead it is the same projects, as seen in the early days of 5G – twice from the two operators.
Hence, there is a desperate need for – and huge opportunities for both end-user and enterprise focused MVNOs, but the right platform and a workable framework needs fine-tuning.
In Malaysia, the other big telecom merger in Southeast Asia, between Celcom Axiata and Digi also created some wave in the MVNO business.
As part of the merger conditions set by the regulator, Malaysian Communications and Multimedia Commission (MCMC), Celcom will have to divest its sub-brand “Yoodo” via a sales auction process at a minimum floor price, no less than the cost incurred by the Celcom/Digi in providing the products and services.
If Celcom/Digi fails to divest Yoodo, the merger has committed to cease Yoodo’s operations. The divestment must be completed within 18 months after the completion of the merger which was in November last year.
Celcom/Digi’s CEO Idham Nawawi said last month that the divestment process is ongoing, and they have received interest from both local and international parties.
In addition, Celcom/Digi had to establish a separate independent MVNO wholesale business (MVNO Business Unit) and transfer the MergeCo Wholesale Business to the MVNO Business unit, thereby ensuring separation from MergeCo’s retail mobile business.
Celcom/Digi shall maintain the separation for a period of three years after implementing transfer to MVNO Business Unit.
The MVNO Business Unit shall maintain a Reference Access Offer (RAO) and make its services available to all new and existing MVNOS through commercially negotiated access agreements, unless otherwise agreed by an MVNO.
The Head of MVNO is empowered to make all decisions pertaining to the commercial terms of MVNO access agreements (including, but not limited to, wholesale pricing), intendedly.
The merger has also affected the MVNO Tune Talk, one of the most popular and oldest MVNOs in Malaysia. Long story short, Celcom became a shareholder of Tune Talk and included the MVNO in its asset’s valuation for the merger. The investors and founders of Tune Talk were split into two groups on the matter and took the case to the courts, arguing that the MVNO could not be considered an asset in the merger with Digi, as Digi was mentioned in the agreements of the MVNO as its main competitor. The court agreed and the case has since been settled.
However, a few weeks ago Tune Talk announced that its customers will no longer be able to redeem their points for AirAsia flights. The other part of the investors in Tune Talk are also the shareholders in the low-frill airline company AirAsia.
It will be interesting to see what Tune Talk will do instead, as it is safe to say Tune Talk was synonymous with AirAsia – a true copy of Virgin Group back in the days.
MVNOs who are eyeing Thailand on their expansion map once the correct setup is in place, are some of the MVNOs in Singapore.
After a period of new entries, MVNOs in Singapore has become quieter and some have left. The market is fierce, the four operators and their MNO sub-brands have turned the competition into a battle on pricing instead of innovation.
Naturally, some of the early MVNOs who have entered the next stage are looking to expand into other markets. A couple of them have tried in markets such as Taiwan and Australia but with less success, while others are looking to expand into markets like Thailand, Vietnam and Malaysia.
Is still not open to MVNOs, although the MVNO Circles Life in Singapore has made a workaround, it is not an MVNO but a white label app.
It is of course ironic that there are no MVNOs allowed into the country considering the mobile network operator, Telkom Indonesia has an MVNE subsidiary and MVNO operations in other countries.
Let’s see how long they can postpone new innovations in the market, especially considering the large enterprises looking to move their factories from China to Thailand, Vietnam or Indonesia.
How is Consumer eSIM Faring in the Southeast Asia Market? Any major players?
The usual players are here and both tourism and business travel are coming back. However, normal SIM packages, eSIM from the mobile network operators themselves, as well as cheap regional roaming offers are much more attractive in terms of price and amount of data, as well as being easier to obtain for the mass.
Normal tourism, business travelers and Meetings, incentives, conferences, and exhibitions tourism (MICE), is an important income source for several layers in the economy and all sails have been set to recoup what has been lost during Covid-19, the inflation, and the effects of Russia’s invasion of Ukraine. This is also a very important topic for the telecom operators in the region, who are looking for roaming and tourist SIMs to bring in more revenue.
Chinese are the largest nationality of travelers in the region and therefore at first glance an attractive segment. However, the operators are already aware of this and have set up a fence around the Chinese tourists by selling their SIM card to the tourists before they are travelling/arrive. In addition, they mostly travel in large groups with companies arranging everything for them before and during their travel.
India is also sending a lot of tourists and travelers to the region; they are however very much aware of and used to local pricing on SIMs and packages. Likewise regional travel is strong but as mentioned; the operators have very attractive roaming packages that the eSIM providers can compete with.
There is however an opportunity in long haul travelers (Europe, Americas, Africa).
Another issue to look out for both in terms of barrier to entry or for some, an opportunity is the ongoing fight against calling and SMS fraud in the region. Although SIM registration is mandatory in most markets, it has proven not to be enough. Regulators and law enforcement are mulling out the maximum number of mobile numbers a user can register. Likewise, there will be more stringent regulations on roaming. In addition, the regulators are also working on regulation of OTT services.
What are the Most Popular MNO sub-brand Niches?
There aren’t any niches. They are just packages of the main brand but with a more youthful graphic design. GOMO from Singtel, is the most wide-spread sub-brand in the countries where Singtel has investment, i.e. Australia, Singapore, Thailand and the Philippines.
Other examples are Yoodo, as mentioned before regarding the merger in Malaysia. Line Mobile in Taiwan and Finnmobile in Thailand belonging to the TRUE/DTAC merger which everyone forgot during the merger, so no conditions on that.
You could argue that they all cater more towards the younger generation or those young at heart but that is only in the graphic design not the packages nor the service. They are just cheaper.
What do you see as 'the next big thing' in the MVNOs Market in 2024?
I think we will see much more and deeper cooperation between the network operators and MVNA/MVNE/MVNOs. Given the slow return on investment in 5G and the business model of the network operators we are already seeing much more interest in wholesale partnerships.
The connection of humans and devices for a range of various business and business models is simply too much for the network operators understand and do alone.
As we approach the deadline for emission targets, we should not forget that MVNOs are already helping the MNOs by purchasing their daily wasted capacity, thus I am also looking forward to seeing more MVNO niches focused on innovative solutions and services for environmental, social, and sustainability.
I am sure we will see more and more niche focused MVNOs who are not looking to sell telephony services but more looking to use telephony as transport to sell more of their existing services and products. We may also see more community based MVNOs, as the consumers continue to move away from being one mass to small groups of individuals with their own needs and wants.