Virtual mobile operators seek to improve their profitability

Mobile Virtual Network Operators (MVNOs) have become a force for change in the mobile phone market thanks to business models that go beyond conventional mobile service offerings.

The first sign of this new era came with Diri: the MVNO, which also develops mobile brands such as Pillofon and Turbocel, acquired the MVNOs Newww and Mi Movil as part of a strategy to expand its customer base in a market where user growth has slowed amid increasing competition and a wide range of operators.

According to the consulting firm The Ciu, MVNOs account for 15.8% of the mobile market in Mexico—a share that already exceeds, individually, the market shares of operators such as Movistar and AT&T, at 14.7% and 15.1%, respectively—reflecting the structural shift the industry is undergoing.

Furthermore, this segment had a market value of US$1.1 billion at the end of last year and is projected to reach US$1.5 billion by 2031, according to forecasts by the consulting firm Mordor Intelligence.

This new phase of consolidation among MVNOs will also have implications for traditional operators such as Telcel, AT&T, and Movistar. One segment where competition could intensify is the prepaid market—the MVNOs’ primary niche and the largest segment in the country, accounting for 82% of mobile lines in Mexico.

With acquisitions, partnerships, and the pursuit of greater scale, MVNOs will set the course for a segment that is no longer a marginal player and is now pressuring traditional operators to rethink their strategies for retaining customers and sustaining their growth.