MVNOs Will Account for Over 10% of Subscribers by 2006

date: October 22, 2001

Subscribers to MVNO services will increase dramatically over the next five years, accounting for 195 million of the world's 1,895m mobile subscribers by end 2006, according to a new study from ARC Group (http://www.arcgroup.com). This means that by the end of 2006 just over 10% of all mobile subscribers will be served by virtual network operators. ARC Group expects a 127% Annual Average Growth Rate (AAGR) of subscribers to virtual operators between 2001 and 2006, compared to a 17% AAGR for mobile subscribers as a whole.

Worldwide Subscribers to MVNOs (m), 2001-2006
Year - Total MVNO subs (m)- %

2001 - 3.22 - 0.4%
2002 - 15.37- 1.5%
2003 - 32.60 - 2.7%
2004 - 36.72 - 4.4%
2005 - 109.97 - 6.6%
2006 - 195.44 - 10.3%

Just as today the incidence of MVNOs varies greatly between regions, so there is wide disparity of MVNO subscribers as a proportion of total subscribers in various regions. MVNOs will be ten times as successful in Western Europe as in Japan by 2006.

"In Western Europe, all the necessary preconditions for the take-off of MVNOs are fulfilled, and therefore there is currently a relatively high incidence of subscribers. Larger countries in the region, such as Germany, France, UK and Italy, are likely to see the highest numbers of MVNO subscribers along with Scandinavia which continues its leadership of services-led virtual operators" says Harry Hobson, lead author of the study "MVNO Strategies-Building Successful Partnerships towards 3G".

The study also points out that in the Asia-Pacific region, there will be a fast take-up of virtual operators in the most advanced economies with a rapid migration to third-generation services, and then a further take-off of virtual operators as the larger territories, like China, open their markets to MVNO entrants. In Japan, the dominance of DoCoMo and the speedy uptake of 3G services without the involvement of MVNOs or service providers, suggests that MVNO prevalence in Japan will stay low.

For the US, the mix of cellular technologies across the country makes it more difficult for a non-telecommunications company to make significant impact on the market. However, the relatively low penetration of mobile, particularly amongst the younger generation, holds a major attraction for strong-brand entrants to gather future market share.

In the Rest of the World, it is expected that the richer territories in the region, such as Canada, Brazil and Poland, will see a rise in MVNO partnering in the next 5 years. However, the relatively poorer countries will not have mobile markets that are sufficiently mature or liberalised to tempt external players to enter their markets.

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