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China's MVNOs Prepare for Breakthrough 2016

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China's MVNOs recorded 10x growth in subscriber numbers in 2015, though their 20 million strong customer base still suffers from marginal usage profiles and low spend, according to Strategy Analytics .

Their research predicts that the improving regulatory climate, with new wholesale pricing requirements and full commercial MVNO licenses, will significantly boost growth opportunities in 2016.

Guang Yang, Senior Analyst, Wireless Operator Strategies, said: "The MVNOs have worked hard to identify profitable market segments and develop new service models. Market leader Snail Mobile is a good example, tying its mobile service into gaming-optimized handsets, with further hardware bundling niches in the wearables sector. MVNOs have also focused on enterprise applications and international roaming to carve out sustainable niches."

Snail Mobile, d.Mobile and YuanTel currently account for one half of MVNO subscribers in China, with business models built on mobile gaming, consumer electronics retailing, and enterprise services respectively. A combination of 96% mobile subscription penetration and high wholesale data prices have forced China's MVNOs to play in market niches, often offering a secondary SIM card to the customers' main mobile service. This has resulted in average revenue per user (ARPU) 75-80% below that achieved by China's three network operators, and average data usage 85-90% lower.

Phil Kendall, Executive Director, Wireless Operator Strategies, added: "With commercial MVNO licenses expected to be awarded this year, there is potential for international companies to enter the market. More importantly, the government's policy on lower wholesale data rates will expand the business model opportunities, allowing the MVNOs to offer mobile data as something other than a loss leader."


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