Sara's Telecom trends and predictions for 2024: A booming MVNO market and much more

26th February, 2024

Predictions are a delicate matter, which is why this year I will focus more on the hard facts and less on speculation. If there is one thing I have learned after almost 3 years in the telecom space; things happen much slower than I can fathom. Even though telecom as an industry is resilient to change, there are strong forces making waves on several fronts. I am referring to Revolut’s entry into telecom this year as well as to the explosion of new Mobile Virtual Network Operators (MVNOs) being launched, targeting everything from travellers to football fans.

Below I’ve summarized three major trends that I believe will impact telecom in 2024 and beyond. And if you make it to the end, you will see which of my predictions from 2023 turned out to be true.

1. The “Mint mobile” effect is real, the MVNO market is booming.

More MVNOs are minted than ever. Some refer to it as the “Mint mobile effect. The global MVNO market size was worth 84.6 billion USD in 2023 and is expected to grow at a compound annual growth rate (CAGR) of 6.7% to reach 116.8 billion USD by 2028. This growth is fuelled by everything from deregulation, digitisation, and a need for MNOs to monetise infrastructure investments to changing consumer behaviour.

There is a new breed of MVNOs in town that is driven by unique and niche value propositions that give MVNOs a competitive edge. Traditionally MVNOs have solely competed based on low cost which is a race towards the bottom unless you have a very favourable network deal. MVNOs have realised that they need to compete based on value for long-term growth. On top of this, I see a greater interest from (Mobile Network Operators) MNOs to find new ways to capitalise on their network investments. To sell spare capacity to MVNOs is a low-hanging fruit that for many wholesale departments is not utilised fully. There are several ways to do this, and the MVNO/E strategy needs to be thoroughly integrated into the overall MNO strategy.

Deregulation is another driving force behind a booming MVNO market. Nigeria is one of the most monitored markets currently as the deadline for commercial launch for several MVNOs is approaching at lightning speed. Deregulation serves as a massive opportunity. But it also brings with it a myriad of challenges that need to be overcome to achieve success.

Lastly, the adoption of eSIM is finally taking off and with it comes new business opportunities for MVNOs. New MVNOs are popping up daily, offering international roaming and travel eSIMs to consumers globally. This is a trend that is finally taking off as eSIM is becoming more mainstream.

2. A BSS (Business Support System) vendor market in transformation; disruption or consolidation?

Gartner estimates the BSS software market size to be $11.2B in 2023 as a constant currency. A booming BSS market follows software providers that aim to profit from this imminent opportunity. This goes for both established legacy players and cloud BSS companies with more flexible and cost-effective propositions. This is driven by a need to digitise out-of-date tech stacks as well as service providers looking to push new business models and service offerings. To do this in a fast and cost-efficient manner they need BSS stacks that support this transformation both today and in the future.

In 2027, about 50% of BSS vendors are expected to be new entrants that are cloud-native and offer true SaaS (Software as a Service) solutions. The data shows that customers are moving away from legacy providers to challengers that offer true cloud solutions on a SaaS model. This trend is positive for the telecom industry as it is likely to speed up innovation. Although legacy providers are on a steady decline and new projects are served by the challengers, service providers need to be on the lookout. Not all BSS providers offer “true” cloud-native, or SaaS solutions and it is up to the buyer to do proper due diligence.

Finally, this highly competitive BSS marketplace can evolve into a few different scenarios including market disruption or split. I am willing to put my money on consolidation. There is a myriad of BSS vendors out there and new ones are popping up regularly. In many ways, the market is inflated, and it is fuelled by aggressive and unprofitable pricing strategies, mostly from the incumbents. This cannot last forever and at some point, consolidation will be inevitable.

3. The used phone market is growing while sales of new smartphones are falling.

The refurbished phone offerings and sales have been much slower than I first anticipated a couple of years ago. This resistance has been fuelled by unfavourable regulations for refurbished phones that have made them too costly and cumbersome to repair. This is despite research showing that most European citizens would rather repair than buy a new device if they had a choice.

At the end of last year, the EU parliament adopted its position on a stronger “right to repair” which sheds optimism in a society where fast fashion is as common in telecom as it is in the apparel industry. The proposal aims to “… encourage more sustainable consumption, by making it easier to repair defective goods, reducing waste and supporting the repair sector.” This way consumers can request to have goods repaired even after the warranty has expired. In Sweden, MNOs are calling for the government to waive VAT on refurbished devices to further incentivise consumers to buy used devices and to make it more profitable for the companies offering these services.

Although regulation lags, this is not the only challenge for the refurbished device market. Data shows that the inventory of premium used phones is a challenge as consumers hang on to their devices longer. This is a catch-22 as it is the premium segment that offers the highest margins and interest for the secondary phone retailers. That said, in 2023 the sales of used devices went up to 304.9M USD 2023 as the sales of new phones fell again last year. This bodes well for companies like Refurbly and Swappie who are two of the leaders within the circular economy. I am still waiting for a better supply of something else than Apple phones, but it seems like I will have to patiently wait a bit longer.

So, which of my 2023 predictions came through?

These were my predictions last year;

Telco stock prices along with Average Return Per User (ARPU) are decreasing and new updated business models are necessary.
New niche players are popping up continuously and there is no way to beat them by being everything for everyone.
The SME/SMB segment constitutes a way too large part of the B2B segment to be neglected

I would say like this, two out of three predictions have come true. Telcos have realised that new business models and revised strategies are needed to turn the stock market decline around and niche players are posing a greater threat than ever. The B2B segment on the other hand is still lagging and the untapped opportunity, especially in the small business segments, will remain for another year.