Strand Consult has identified five paths that smaller operators on a market can choose between:

1. Cost control – Use tight cost control and a close focus on all costs to ensure that your company is being run more cost efficiently than your competitors. This is a tough business strategy and is being used to a lesser or greater extent by all mobile operators every day.

2. Infrastructure sharing – An increasing number of operators are not only outsourcing smaller or larger parts of their business, they are also now signing network sharing agreements with their competitors, allowing them to create companies that deliver mobile traffic to multiple competing mobile operators.

3. An aggressive MVNO strategy – Using an aggressive MVNO strategy makes it possible to significantly reduce your sales and marketing costs. In practice mobile operators using this strategy will move away from purchasing expensive customers with a high margin, that will not be profitable for 12 – 24 months, to purchasing customers with a lower margin, but that are generating a positive cash flow from the first month.

4. A focused strategy – An operator can also have a focused strategy, where they avoid customer segments and products that they either do not have the resources to handle, or the ability to service. One way of doing business using this strategy would be to solely focus on SIM-only products and not subsidise any type of hardware. By using this strategy, an operator can profile themselves on the market with simple and clear messages and at the same time significantly reduce their distribution costs.

5. The capitulation strategy – Operators thinking about this type of strategy have most probably already tried one or more of the above strategies without much success and have therefore concluded that their business may have a larger value if they try selling it to a competitor, that will gain the advantage of being able to benefit from the synergies of merging two mobile operators. There have been numerous examples where we have seen very high “scrap” values for mobile operator. For many mobile operators that are number three or four on a mobile market, this model is probably the most profitable for their shareholders.

Not much to add here…

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