The MVNOs Series interviewed Danny Sritharan, regional director MNO partnerships at Asia Pacific Lycamobile, to gain some insights into the APAC region MVNO market, including the role of regulators facilitating the partnerships between players in the region, as well as what countries we can learn from and how new MVNOs can successfully enter these markets.
Danny Sritharan is the MVNO head and regional director for Lycamobile Asia; Danny’s role is to establish Lycamobile’s MVNO business in the Asian region, speaking to regulators, acting in compliance with the region’s laws and acquiring MVNO licenses, and doing a tie-up with an MNO, so that Lycamobile can enter the region and set up its operations and team in any particular country.
“It’s in Lyca’s plans to acquire MVNO licenses and operate the business in this region. Over the next 3 years, we would be establishing a strong presence in this region.”
In the interview for the MVNOs Series, Danny told our team that there are countries in this region which have already opened up the MVNO business licenses and there are more countries that are keen on opening up their markets for the MVNO model, but they are still not ready for it, they require regulations in place as well as the ability to create a good synergy between the MNO and MVNO.
He added that "the main challenge faced in these countries lies on the role of the regulator, which includes: putting into place a Regulatory Framework, providing an MVNO with the license, enabling the MVNO to do an MNO tie up, ensuring the MVNO and MNO are in a comfortable partnership, as well as reassuring MNOs of the benefits of the partnership.
In order to provide new MVNOs with a sustainable environment, regulators must fulfil their role in communicating the partnership benefits to MNOs; failing to do so will allow MNOs to offer their networks to MVNOs for a very high price, which in the long term MVNOs won’t be able to afford and eventually they will fail in that market place.
We can look at Malaysia’s scenario as an example, the country has been quite successful in the establishment of its MVNO market; the initial 5-6 years establishing the market were very challenging, the MNOs didn’t even want to talk to the MVNOs. Now however, the story is different, not only MNOs talk to the MVNOs but there are guidelines and frameworks in place ie. Access Reference Document that they must follow in order to accommodate the MVNOs in the marketplace.
From this example we can see that there’s more to the role of a regulator than giving licenses to MVNOs, they must also ensure regulations and guidelines are officially published and available for industry players in the market as well as for new entrants.
With more structure and guidelines in place, for the entry of new MVNOs into the Malaysian market, MNOs now have much more respect for MVNOs than they had in the past; the new regulations keep away ‘mediocre’ MVNOs, which don’t know how to run a business and could potentially cannibalise the MNOs operations."
MVNOs Series: How do you see the regulator’s role in the Asian’ MVNO market and facilitating the interaction and partnership between MNOs and MVNOs?
Danny Sritharan: First things first, the MNO has to see a value proposition in order to accommodate an MVNO; if they can’t see the value proposition and revenue potential for their organisation, but instead see an MVNO entering, disrupting and cannibalising the market, the MVNO is going to fail. So, the regulator not only has to play a role of giving out a license and setting the guidelines, they have to bring the MVNO and MNO together so that both parts can see the benefits of the value proposition, and the partnership working both ways.
The relationship between MNO and MVNO needs to work as a marriage and in order to make that happen, the regulator has to play a more active role than they play at the moment; maybe they don’t know what role to play, or they believe their only job is to give licenses to the MVNO; so, perhaps the industry as a whole needs to guide them in this process.
There are numerous cases of unsuccessful MVNOs in many countries in Asia, and currently, with many other countries in the region willing to open up for MVNOs it’s important to establish some standard guidelines now otherwise, new MVNOs will also struggle to establish their business in those countries.
MVNOs Series: Can you tell us about your work with the regulators in the region?
Danny Sritharan: Lycamobile is in discussions with regulators and MNOs in this region and is trying to establish its own operation in the APAC countries, and once regulators give the license to one MVNO, other MVNOs can apply for the same license, so in a way, Lycamobile is helping other MVNOs to come to the marketplace in those countries.
MVNOs Series: Where do you see opportunities for MVNOs in the region, and how is Lyca positioned to take on those opportunities?
Danny Sritharan: Currently operating in 22 countries, Lycamobile clearly understand their market, and only focus on one market segment, the ethical MVNO market, serving foreign workers, students and tourists, and the MVNO has no intentions of exploring other opportunities but the ones in its market.
For other MVNOs on the other hand, I’d say that every country offers many different opportunities, so it’s vital that the MVNOs have clarity on which niche market they want to address, know the model and value proposition they will bring to their customers, and how the MNO they will partner with can leverage and benefit from that customer base they will serve.
There are still many MVNO models that are inexistent and haven’t been thought of because everyone is looking at currently MVNO models and trying to replicate them instead of taking the first step and exploring new opportunities with a different business model, in different countries, and the main reason for that is because they don’t want to run the risk of failing.
Some companies choose to watch other MVNOs over the fence and if they don’t fail, but do it well, then they replicate the same model of MVNO and become a direct competitor, as it’s much easier to copy a business model that has been successful.
MVNOs Series: How to create a sustainable MVNO business in countries with low ARPU?
Danny Sritharan: The ARPU in the Asian region has decreased significantly so if an MVNO chooses to focus on standard services alone, such as data and SMS, it is going to be really difficult for them to create additional revenues.
In order to avoid that problem, Lycamobile has a few added value propositions, including Lyca radio, Lyca TV, Lyca money, Lyca travel, Lyca remittance which are add-ons that foreign workers can take advantage of, on top of the standard voice, data and SMS services.
As an example, Lyca customers in Malaysia can watch Bangladesh cricket on their phone, remit money to their spouse to Bangladesh, listen to Bangladesh songs on their mobile and even utilise Lyca’s credit and debit card facility from their mobile to purchase goods and services.
By providing more add-ons to their customers, Lyca is not only increasing their revenue but also holding on to their customers, so that the competition doesn’t take them away.
If MVNOs can create such a value proposition and enhance their customer experience with the mobile phone, even though the ARPU is low they will be able to create a different revenue source, apart from the ARPU.
The good news is, in some cases, the added revenue source can be higher than the ARPU itself.
Danny Sritharan will join us at MVNOs Asia in Singapore, 26-27 September, and take part in two sessions at the conference:
Have your say in the discussion, book your ticket now>> https://goo.gl/gNxDqT