Multi-Brand Wholesale Strategy for Mobile Network Operators
Slow growth is putting pressure on returns
In most mature mobile markets growth has stalled and margins have been under pressure for some time. The industry outlook remains poor with further price deflation and regulatory rate cuts expected. In addition, mobile data traffic is growing rapidly but there is a disconnect between traffic and revenue growth which will change the business model and may put pressure on mobile operator returns.
In emerging markets operators have historically enjoyed high levels of growth but the rate of revenue growth is now beginning to slow. Furthermore, the number of players has increased with new licence awards and some new entrants are struggling to achieve critical mass as the market rate of growth slows.
Market leaders and market challengers in both developed and emerging markets are looking to maintain growth but also to manage carefully the cost base.
Network sharing, outsourcing and cost reduction are common responses
There are a range of strategic initiatives which mobile operators can employ in order to outperform their competitors in this challenging environment: Network sharing and outsourcing are increasingly common and all operators should explore the benefits of such initiatives. As markets mature operators have also been looking to reduce costs through restructuring programmes to ensure their overhead functions are not acting as a drag on profitability. There is a further initiative however which few operators have embraced fully which we believe offers the elusive growth that mobile operators seek.
A multi-brand wholesale strategy offers growth without significant customer investment
In this paper, Scott McKenzie, former Chief Strategy Officer for the Dutch operator KPN’s international mobile division and former CEO of KPN’s mobile wholesale business, explains why a multi-brand wholesale strategy can be the right commercial approach in a mature or maturing market not only for late entrants but also for the leading operators.
KPN, for example, has successfully deployed such a multi-branding wholesale strategy across all its core markets and reaped the benefits. The strategy involves in-house and third party MVNOs, service providers and branded resellers. In order to do this KPN became more market driven and radically changed the way it operated. As a result of adopting this strategy KPN has outperformed many of its peers in the markets in which it operates.
A multi-brand strategy is not without its risks however, for example careful customer segmentation is essential to ensure that existing revenues are not cannibalised.
Coleago’s multi-brand wholesale strategy development process
At Coleago we have a highly experienced team and a robust two-stage process for helping clients develop and implement a multi-branding wholesale commercial strategy. To read more about our wholesale strategy process download the paper below or call to speak to Scott McKenzie or one of our other Directors.
Main contact:
Scott McKenzie
Director
Tel: +44 7825 294 576
scott.mckenzie@coleago.com