MVNOs don't need MVNEs (and MVNEs’ loss will be MNOs’ gain)

Mobile virtual network operators (MVNOs)—the startups of telecom—are having a moment in Africa. The market is evolving, with increased adoption of smartphones driving demand for mobile connectivity. Unlike mature markets where MVNOs typically compete for existing customers, African MVNOs are expanding the entire digital ecosystem by connecting the previously unconnected. For example, Nigeria’s Communications Commission recently awarded over 40 MVNO licenses across five tiers. South Africa has seen similar momentum with early pioneers like Virgin Mobile, TelkomONE (now SABC+), and Rain paving the way for newer entrants.

But building a successful MVNO has always been a challenge. For every Mint Mobile success story (acquired by T-Mobile for $1.35 billion after years of growth powered by Ryan Reynolds’ celebrity marketing), there are dozens of failures: Blyk, ESPN Mobile, Flash Mobile, Ovivo… the list goes on and on. Industry statistics suggest up to 80% of MVNOs fail to achieve sustainable scale.

Why has it been so hard? Two words: it’s expensive. After the purchase of connectivity from the MNO, technology infrastructure represents one of the largest upfront costs and ongoing operational expenses for MVNOs, alongside the ever-increasing customer acquisition costs. Traditional telecom infrastructure required massive upfront investments before serving a single subscriber—a model that simply doesn’t align with MVNO startup economics.

But times are changing, because the tech is changing—rapidly. Hyperscaler investment in mega data centers, cloud-native business support systems (BSS), and wholesale platforms are fundamentally improving the odds for MVNOs, allowing them to start small, pay based on actual usage, and scale up as they grow.

The MVNO tech stack

Here’s how MVNOs have tried to solve their technology problem in the past, none of them good:

The full MVNO approach demands $5–10 million for BSS licensing, millions more for integration, and 12–18 months before serving a single subscriber. The math simply doesn’t work for startups.

The thin MVNO approach relies on MVNEs, the kings of fake software as a service (SaaS). With this approach, the MVNE buys typical telco software, divides it up across several MVNOs, adds a markup, and calls it a “service.” MVNOs get innovation handcuffs while watching another company take a cut. Worse, if the MVNO doesn’t pick a stable partner, it can go down with the ship. When Elephant Talk collapsed in 2016, it took down every MVNO on its platform overnight. For MNOs, subpar MVNEs bring brand risk without control, with critical market data filtered through middlemen.

A third approach—direct MNO stack access—hasn’t been viable because traditional BSS platforms weren’t designed for multi-tenancy. Today, MNOs restrict access through limited APIs that severely constrain what MVNOs can do. But MNOs pass on this because it’s too hard to support at scale, and too much of a headache.

What MNOs and MVNOs have always needed is technology that lets them start small, scale up as revenue grows, and maintain control the whole way. But it’s never been available—until now.

Africa’s perfect-timing

Africa isn’t late to the MVNO party. It’s arriving at exactly the right moment, as three technological shifts converge: hyperscaler investment in Africa, new cloud-native SaaS options available on the market, and new wholesale platforms for MNOs.

1. Hyperscaler investment in Africa provides the cornerstone

Public cloud infrastructure is the foundation that makes new MVNO models possible. And the timing couldn’t be better—all three major hyperscalers have recognized Africa’s potential with significant regional investments:

• AWS in Cape Town, South Africa
• Google Cloud in Johannesburg, South Africa
• Microsoft Azure in Cape Town and Johannesburg, South Africa

These investments give African providers access to critical resources they historically had to acquire individually at great expense. Instead of building private data centers, managing unreliable power with expensive generators, or struggling with limited compute capabilities, African telecom companies can now leverage world-class infrastructure with:

• Reliable electricity and power backup systems
• The latest computing capabilities and hardware
• Enterprise-grade security and compliance
• Advanced services like artificial intelligence (AI), analytics, and database management

This democratization of technology resources is revolutionary for African operators—MNOs and MVNOs alike. The ready-made infrastructure makes technological revolution possible in markets where building it all from the ground up has been prohibitively expensive.

2. Cloud-native SaaS lets MVNOs pay as they grow

SaaS solutions (like Totogi) fundamentally change MVNO economics through consumption-based pricing. Our Charging-as-a-Service and BSS offerings eliminate the massive upfront investments that doomed previous generations of MVNOs, replacing them with pay-as-you-grow models that scale directly with revenue. The technology automatically upgrades without disruptive projects or technical debt.

Our approach slashes startup costs by 95% and eliminates the traditional “build for peak” mentality. When your technology costs scale as a percentage of revenue rather than fixed costs, profitability becomes possible at any average revenue per user (ARPU) level. For markets with  a $2-3 monthly ARPU, it’s the difference between a viable and impossible business model.

3. Wholesale platforms eliminate the need for MVNEs—and open the door for MNOs

Modern wholesale platforms transform the traditional MVNO-MNO relationship by creating a direct connection, eliminating the problematic MVNE middleman.

For example, Totogi’s Wholesale Platform offers MNOs a multi-tenant solution specifically designed for managing a MVNO tech stack. It keeps the MNO’s core business operations undisturbed while allowing them to provide a tech solution direct to MVNOs. MNOs get full visibility and control over the MVNO experience while giving MVNOs the flexibility and speed they need to succeed.

These new technologies eliminate the MVNE middleman. MNOs gain a revenue stream and MVNOs have access to affordable technology that scales with their success.

The tech stack of the future

The MVNO landscape is evolving rapidly, especially in emerging markets. Nigeria’s 40+ newly licensed MVNOs and South Africa’s growing virtual operator ecosystem demonstrate the momentum behind the new model. But operators can use this new approach anywhere, in emerging or  established MVNO markets, from Africa to  Europe and the US.

At TelcoDR, we’ve seen forward-thinking MNOs embrace this new approach with remarkable results. By providing MVNOs with a technology foundation designed for startup economics, these operators are creating sustainable partner ecosystems that drive network utilization and open new revenue streams.

MVNOs will always be startups—but with Totogi’s platform, you can give them the foundation they need to succeed while protecting your network, brand, and business interests. And maybe more than 2 in 10 will go on to build viable businesses.

The future belongs to operators who can support innovation while managing risk. Are you ready to transform your MVNO strategy?

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