Market for 'no frills' mobile operators to increase over next five years, finds Ovum

The independent telecoms analyst believes the supermarket giant and other established retailers will see increased success in the 'no frills' mobile market as more people turn their backs on traditional players and go for convenience.

Tesco and its counterparts are mobile virtual network operators (MVNO), buying minutes from traditional players to sell to their own customers.

It is a model that works well as all the retailers need to do is free up shelf space for their mobile offering, then focus their resources on marketing, distribution and sales, leaving the networking issues to the traditional operator.

Keeping it simple

In a new report* Ovum publishes research that reveals that the market for MVNOs will hit 85.6 million connections in 2015, up from 53 million in 2009. Meanwhile revenues will reach US$9.5 billion (about R68 billion) in 2015, up from US$8 billion (about R57 billion) in 2009.

Jeremy Green, an Ovum practice leader, believes that supermarkets are ideally placed to grow their share of the MVNO market due to the large number of customers that come through their doors.

He said: "Connectivity is increasingly perceived as a straightforward commodity, so we expect to see an increase in the 'no frills' market, driven mainly by the supermarkets.

"Perhaps predictably, Tesco, which partnered with O2 to launch Tesco Mobile in 2003, is one of the most successful in the 'no frills' mobile arena and has been able to expand its offering into Ireland and Slovakia, where both parties are present. "

MVNOs operate across a range of market segments and as well as 'no frills', include business mobile services, online-only and the youth sector.

* Global MVNO outlook: 2010-15