Understanding the profitability of the Full and Light MVNOs

Before launching your business, you have to weigh the pros and cons and decide in which direction to go.

Light MVNOs or Full MVNOs ? If you decide not to invest in an infrastructure and to get some revenues shared and limited, conclude an agreement with a MNO to be a Light MVNO.

If you want to invest in an infrastructure and get revenues from your own subscribers and from incoming traffic, and have a great flexibility to create your own offers, choose to be Full MVNO. In this case, negociate carefully an access to the spectrum of an operator, called Host Operator or Host MNO.

There are two critical negociating areas with the MNOs : Wholesale rates and telecom service agreement.

Future Full MVNOs have to define a margin included on the wholesale rates - based on a forecasted usage and patterns.

As far as telecom service agreements are concerned, Full MVNOs have to take care of the interfaces and services provided by the host MNO. Some interfaces are more expensive than others.

Another point to prevail is that MVNOs help MNOs to drastically improve their EBITDA margins by reducing Subscriber Acquisition Costs (SAC) with just a slight reduction in ARPU (Average revenue Per User).