MVNOs Shaking Mobile Market in Mexico

Growth in the number of MVNOs in Mexico in the last two years has helped inject more competition into a still highly concentrated mobile market by bringing lower prices and tailored services to users.

These are the main conclusions of an analysis carried out by consultancy The CIU on the MVNO sector in the country, which is one of the markets in Latin America where this format has developed most.

Together, the biggest Mexican MVNOs accounted for over 8mn lines as of the end of the second quarter, up 79.8% year-on-year, producing revenues of 1.63bn pesos (US$820mn), nearly twice the amount seen in the same quarter of 2021, according to the study. Over 80% of this revenue comes from prepaid services.

Overall ICT market in Mexico delivered revenues of 136bn pesos (US$6.8bn) in Q2, up 4% year-on-year. In the second quarter of 2022 there was 6.4% year-on-year growth in mobile operators’ revenues, despite a drop in billing from equipment sales.

Despite efforts by regulators in recent years to dilute the telecoms monopoly in the country, the fact is that América Móvil remains the comfortably dominant player.

The Mexican MVNO market is led by Bait, with 36.2% of all 8mn mobile lines in the subsector at the end of June, according to the consultancy’s estimates, followed by Freedom Pop (15.1%), Oui (7.9%), Virgin (6.6%), Megamóvil (5.4%) and Oxxo Cel (1.6%), among others.

What are MVNOs?

MVNOs, or Mobile Virtual Network Operators, are companies that provide mobile communication services without owning the physical infrastructure, such as cell towers and network equipment. Instead, they lease network access from established Mobile Network Operators (MNOs) like América Móvil (Telcel), AT&T, and Movistar, and then brand and resell these services to consumers. MVNOs operate under their own brand and marketing strategy, differentiating themselves by offering tailored service plans and pricing structures to meet the specific needs of their target audience.

How MVNOs Operate in Mexico

MVNOs have gained substantial traction in Mexico due to the regulatory framework that allows them to enter the market and offer alternatives to the traditional telecom giants. Here’s how MVNOs operate in the country:

1. Network Leasing: MVNOs in Mexico lease network access from established MNOs. This access includes voice, data, and SMS services, enabling MVNOs to offer comprehensive mobile packages to their customers.
2. Branding and Marketing: MVNOs create their own brand identity, marketing strategies, and service offerings. They target specific market segments, such as budget-conscious consumers, travelers, or niche audiences, tailoring their services to meet the needs of these customer groups.
3. Pricing Flexibility: One of the key advantages of MVNOs is their flexibility in pricing. They often provide competitive and cost-effective plans, allowing consumers to save money while still enjoying reliable mobile services. These plans can include prepaid, postpaid, and pay-as-you-go options.
4. Specialized Services: Some MVNOs in Mexico specialize in unique services or niche markets. For example, they may focus on international calling, data roaming, or other specialized features that cater to specific customer requirements.
5. Distribution Channels: MVNOs distribute their services through various channels, such as their own physical stores, online platforms, and partnerships with retailers. This diversification allows them to reach a broad audience.
6. Customer Support: MVNOs typically offer customer support tailored to their brand. This can include multilingual support or specialized assistance for their target customer base.
7. Regulatory Compliance: MVNOs must adhere to the regulations set by the Mexican government, which are designed to promote competition and protect consumer rights in the telecom sector.

Impact on the Mexican Telecom Market

MVNOs have injected healthy competition into Mexico’s mobile market, offering consumers a wider array of choices and competitive pricing. Their presence challenges traditional MNOs, encouraging them to improve their services and pricing models. As a result, Mexican consumers are benefiting from lower prices and more tailored mobile services, making MVNOs a growing telecom trend in the country.

Benefits of MVNOs for Mexican Consumers

MVNOs (Mobile Virtual Network Operators) offer a range of benefits to Mexican consumers, contributing to their increasing popularity in the country’s mobile market. Here are some of the advantages that MVNOs bring to mobile users in Mexico:

1. Cost Savings: MVNOs are known for their competitive pricing. They often provide more affordable mobile plans, making them an attractive choice for budget-conscious consumers. These cost savings can be particularly appealing in a country where mobile services can be relatively expensive.
2. Flexible Plans: MVNOs offer a diverse array of service plans, allowing consumers to choose options that suit their specific needs. Whether it’s prepaid, postpaid, pay-as-you-go, or specialized plans for international calling or data roaming, MVNOs offer flexibility that traditional carriers may not provide.
3. Tailored Services: MVNOs cater to niche markets and specific consumer segments. This means that they design services and plans that are tailored to the unique needs and preferences of their target audience. For example, some MVNOs focus on offering low-cost plans for local calls and text messages, while others concentrate on international calling or data-heavy packages for travelers.
4. No Long-Term Contracts: Many MVNOs offer plans without the need for lengthy contracts. This flexibility allows customers to switch providers or plans without being locked into a commitment, giving them more control over their mobile services.
5. Quality of Service: MVNOs often provide comparable network coverage and quality to that of the major Mobile Network Operators (MNOs). This ensures that consumers can enjoy reliable mobile services while still benefiting from the competitive pricing of MVNOs.
6. Innovative Features: MVNOs sometimes introduce innovative features or services that align with their target market. These can include unique apps, customer loyalty programs, or partnerships that provide additional value to consumers.
7. Customer Support: Some MVNOs offer specialized customer support, such as multilingual assistance or support tailored to their niche customer base. This can enhance the customer experience and satisfaction.

Competition in Mexico’s Mobile Market

The Mexican mobile market has historically been dominated by a few major players, primarily América Móvil (Telcel), AT&T, and Movistar. However, MVNOs have emerged as a force to be reckoned with, playing a significant role in challenging the established players and contributing to increased competition in several ways:

1. Price Wars: MVNOs’ competitive pricing has forced traditional MNOs to adjust their rates, leading to price wars that benefit consumers. As MVNOs offer more cost-effective options, MNOs are compelled to match or improve their own offerings to remain competitive.
2. Market Diversity: MVNOs cater to specific market segments and niches, which diversifies the mobile market. This diversity prompts MNOs to adapt and create specialized plans to meet the demands of various consumer groups.
3. Innovation: MVNOs often introduce innovative features, services, or distribution channels, inspiring MNOs to enhance their offerings to stay relevant and competitive.
4. Consumer Choice: With the increasing number of MVNOs and their unique service plans, consumers have more choices than ever. They can select providers and plans that align with their preferences and budget, putting pressure on MNOs to keep up.
5. Regulatory Attention: The growing influence of MVNOs has attracted regulatory attention, encouraging more balanced competition in the telecom industry. Regulators have taken steps to ensure a level playing field for all players.

MVNOs have disrupted the traditional mobile market in Mexico by offering cost-effective, flexible, and tailored services that benefit consumers. Their presence has introduced competition that has led to lower prices, innovation, and a broader range of choices for Mexican mobile users, ultimately improving the overall state of the telecom industry in the country.

Key Players in the Mexican MVNO Market

The Mexican MVNO (Mobile Virtual Network Operator) market has seen significant growth, with several key players emerging to challenge the traditional Mobile Network Operators (MNOs). Here’s a closer look at some of the leading MVNOs in Mexico, their market shares, and what sets them apart:

1. Bait (36.2% Market Share):
   • Market Dominance: Bait holds the largest market share among Mexican MVNOs, making it a prominent player in the industry.
   • Unique Selling Points: Bait is known for offering affordable plans that appeal to price-sensitive consumers. They provide prepaid and postpaid options with flexible data packages.
   • Special Features: Bait often offers exclusive promotions, such as free WhatsApp usage without consuming data, making it a popular choice for messaging app enthusiasts.
2. FreedomPop (15.1% Market Share):
   • Market Penetration: FreedomPop has established a significant presence in Mexico, capturing a sizable portion of the market share.
   • Focus on Data: FreedomPop is recognized for its data-centric plans, catering to users who require extensive mobile data for internet access and communication.
   • International Roaming: FreedomPop is popular among international travelers for its international roaming options and low-cost global connectivity.
3. Oui (7.9% Market Share):
   • Market Expansion: Oui has steadily expanded its customer base and market share in Mexico.
   • Youth-Oriented Plans: Oui targets younger consumers and offers plans with features and pricing designed to appeal to this demographic.
   • Social Integration: Oui may provide social media integration or benefits that align with the preferences of its target audience.
4. Virgin (6.6% Market Share):
   • Strong Brand: Virgin is a globally recognized brand that has made a mark in the Mexican MVNO market.
   • Value-Added Services: Virgin often focuses on providing value-added services, like music streaming or exclusive content, as part of their mobile plans.
   • Customer Loyalty: Virgin aims to build customer loyalty by offering unique experiences and rewards to its subscribers.
5. Megamóvil (5.4% Market Share):
   • Regional Presence: Megamóvil may have a regional focus, serving specific areas or communities in Mexico.
   • Local Partnerships: They might partner with local businesses or organizations to offer tailored services and promotions to their customer base.
   • Affordable Options: Megamóvil typically offers cost-effective plans for users looking for budget-friendly mobile solutions.
6. Oxxo Cel (1.6% Market Share):
   • Retail Presence: Oxxo Cel leverages the vast network of OXXO convenience stores in Mexico to distribute and promote its services.
   • Convenience: Users can easily purchase SIM cards and top-ups from OXXO stores, making it a convenient option for many consumers.
   • Basic Services: Oxxo Cel may focus on providing essential mobile services for customers who require simple, no-frills plans.

These MVNOs have successfully carved out their niches in the Mexican market by offering a variety of services, competitive pricing, and targeting specific customer segments. Their contributions to the Mexican telecom landscape have fostered competition, leading to better choices and value for mobile users. While Bait is the dominant player, other MVNOs like FreedomPop, Oui, Virgin, Megamóvil, and Oxxo Cel have also gained significant market share, each with its unique offerings and strategies. As the MVNO sector continues to grow, it is likely that more players will enter the market, further diversifying the options available to Mexican consumers.

Tips for Choosing the Right MVNO

Selecting the right MVNO (Mobile Virtual Network Operator) in Mexico involves considering various factors to ensure that the service meets your specific needs and preferences. Here are some tips to help readers make an informed decision when choosing an MVNO:

1. Coverage and Network Quality: Check the coverage and network quality provided by the MVNO. Ensure that it aligns with your geographical area and the places you frequent.
2. Data and Usage Requirements: Determine your data, talk, and text requirements. Different MVNOs offer plans tailored to varying usage patterns, so choose one that matches your needs.
3. Plan Pricing and Flexibility: Compare the pricing of different MVNOs. Look for affordable plans and flexible pricing structures that suit your budget.
4. Prepaid vs. Postpaid: Decide between prepaid and postpaid plans. Prepaid plans provide more control and no contracts, while postpaid plans may offer added convenience but might come with contracts.
5. Additional Services and Features: Consider any additional services or features provided by the MVNO, such as international calling, data roaming, or value-added services like music streaming.
6. Device Compatibility: Ensure that your current smartphone is compatible with the MVNO’s network. Some MVNOs may require specific phone models or unlocked devices.
7. Customer Support: Assess the quality of customer support offered by the MVNO. Reliable customer service can be crucial if you encounter issues with your service.
8. User Reviews and Recommendations: Read user reviews and seek recommendations from friends or online communities. Real-life experiences from other customers can provide valuable insights.
9. Contract Terms: Review the terms and conditions, including any contract commitments, early termination fees, and data limits. Understand what you’re agreeing to.
10. Specialized Plans: If you have specific needs, such as international travel or family plans, look for MVNOs that specialize in those areas.
11. Data Speed and Throttling: Inquire about data speed and any throttling policies. Some MVNOs may limit data speeds after a certain usage threshold.
12. Regulatory Compliance: Ensure that the MVNO complies with Mexican telecommunications regulations and consumer rights. Check for transparency in billing and dispute resolution.

How to Switch to an MVNO

If you’re ready to make the switch to an MVNO, here’s a step-by-step guide:

1. Choose Your MVNO: Based on your research and the tips above, select the MVNO that best meets your needs and preferences.
2. Check Device Compatibility: Confirm that your current device is compatible with the MVNO’s network. If it’s locked to your previous carrier, you may need to unlock it.
3. Purchase a SIM Card: Acquire a SIM card from your chosen MVNO. You can often order one online or purchase it at a retail location.
4. Port Your Number: If you want to keep your current phone number, request a number port from your previous carrier. This process ensures you can keep your existing number when switching to the MVNO.
5. Activate Your Service: Insert the MVNO’s SIM card into your phone and follow their activation instructions. This typically involves registering online or contacting customer support.
6. Transfer Contacts and Data: If needed, transfer your contacts and data from your old SIM card to your new one. Most phones have built-in tools for this purpose.
7. Test Your Service: After activation, test your new MVNO service to ensure it works as expected. Check for call quality, data speeds, and text messaging capabilities.
8. Cancel Your Previous Plan: Once your new MVNO service is up and running, contact your previous carrier to cancel your old plan. Be sure to settle any outstanding bills or obligations.
9. Set Up Auto-Pay or Billing: If you’re on a postpaid plan, set up any desired auto-pay or billing arrangements with your new MVNO to ensure uninterrupted service.

By following these tips and steps, consumers can make an informed decision when choosing an MVNO and smoothly transition to their new mobile service provider.

In Conclusion

The MVNO (Mobile Virtual Network Operator) market in Mexico is rapidly evolving, providing numerous benefits and options for consumers. With a variety of players in the market, consumers have the opportunity to find mobile services that align with their individual needs and preferences. Key advantages of MVNOs include cost savings, flexible plans, tailored services, and the promotion of competition in the Mexican mobile market.

Choosing the right MVNO involves careful consideration of factors such as coverage, pricing, additional services, device compatibility, and customer support. It’s essential to research and assess the offerings of various MVNOs to ensure that the selected service suits your specific requirements.

When making the switch to an MVNO, it’s crucial to follow a structured process that includes selecting the MVNO, checking device compatibility, porting your number if necessary, and thoroughly testing the new service to ensure it meets your expectations. Cancelling your previous plan and settling any outstanding obligations with your old carrier is also an important step in this transition.

The growth of MVNOs in Mexico signifies a positive trend, providing consumers with more choices, competitive pricing, and innovative services. As the market continues to develop, users can anticipate even more options and benefits in the future, ultimately enhancing the Mexican mobile telecommunications landscape.