Research Notes

Launching and MVNO would increase revenue and profitability for Facebook and be a game changer in the mobile industry.

Strand Consult has analyzed Facebook from an MNVO perspective and concludes that the company would be a success if it entered the market. The analysis is detailed in its report “The good, the bad and the ugly sides of Facebook”. Only two questions remain, to what extent will Facebook look beyond advertising as a source of revenue, and which operator will succeed to win Facebook MVNO contract.

Buying mobile phone service from a mobile virtual network operator has become commonplace around the world. Virgin Mobile, Simyo, and Lebara are some examples. Just as airline companies offer tickets to wholesale companies for remarketing, mobile operators lease their infrastructure to independent companies that make their own discount mobile brands. The practice has been successful to win many customers away from network operators, so much so that network operators now acquire MNVOs and run them as a part of a multi-brand strategy. In Strand Consult’s analysis and report on the company, Facebook has an even greater opportunity for monetization beyond advertising, that is in monetizing its communications services directly. With the WhatsApp acquisition, Facebook acquires this payment facility, as WhatsApp users pay one dollar per year for the service.

MVNO is a logical step for Facebook the world’s largest communication platform.
One billion users already consider Facebook as their de facto telephone book for friends and family and use the platform for communicating by SMS, text, image and video. Adding mobile voice and data to this mix would not a stretch. Not only does Facebook launch new products all the time, but the ability to be an MNVO can be completely outsourced to a mobile operator.

How and why can Facebook succeed as an MNVO?
Facebook, the world’s most visited website, generates a vast amount of traffic on operators’ networks.  Consumers buy data package from operators to access Facebook, but Facebook gets no monetization from this traffic, only the residual ad revenue from the small number of users who click on ads.  Why should Facebook users buy a data package from an operator to access Facebook when they could just buy their data access to Facebook from Facebook itself?

Mobile operators suffer from commoditization of their products and services.  Though they try to create a unique brand propositions, they have difficulty competing on more than price, and customers buy SIM cards from many providers to maximize their savings even more.  Facebook, however, is recognized brand, and on top of that, it’s a one-size-fits-all brand.  Its platform appeals to everyone, unlike most niche mobile brands which are marketed for certain demographic segments.   Without a doubt, Facebook has the world’s largest distribution platform and potential customer base to market its MNVO offering.

Anyway who does not think that Facebook could pull off the payment process is obviously not up to date on video gaming in Facebook, where Facebook conducts microtransactions in all the world’s currencies.  Facebook has credit card credentials on file already for millions of its users, many of whom purchase premium games, driving one sixth of Facebook’s revenue.  Facebook could offer mobile SIM cards online, and there are a number of companies than can provide the billing and fulfilment.

Mark Zuckerberg talks about product development and monetization going hand in hand at Facebook, and the mission of the company is to help the world connect.  There is no better union of these two goals than to monetize the actual communication between users through voice and data plans.  By launching an MNVO, Facebook could become the world’s largest mobile operator, allowing its users to connect via voice, and make the money its investors demand.

How much could Facebook earn as an MVNO?
Facebook is now at the 1 billion user mark with roughly $4 billion in annual revenue, giving it an annual revenue per user of just $4.  An MNVO, on the other hand, earns between $10-$50 per month per customer with an operating margin between 20-25%, similar to Facebook’s.  Facebook, because it could create a bidding war between the world’ mobile operators to be its provider, could drive that margin even higher.  A mobile operator would cut a sweetheart deal with Facebook just to have bragging rights as Facebook’s provider.
So, only two questions remain.
Is Facebook willing to do it?
Which operator will succeed to get into bed with Facebook?

You can read more about all this in our report The good, the bad and the ugly side of Facebook – A report that describes how Facebook affects the mobile industry strategically, operationally and financially  We discuss the opportunities and challenges of Facebook and suggest ways for mobile operators to respond.  Already a number of the world’s leading operators have purchased this report
Receive more information about this unique new report by simply sending us an e-mailIf you purchase the report, it can be on your desk immediately, giving you quality information about your Facebook strategy and evidence about operators’ challenges with Facebook.
More information: 

The good, the bad and the ugly side of Facebook – A report that describes how Facebook affects the mobile industry strategically, operationally and financially

How to Succeed in the Second-Generation MVNO Market

How media companies can get success on the mobile broadband market

Digital strategy for Telecom and Media industry

Related Information:

Strand Consults Strategic Workshops

Successful Strategies for the Mobile Broadband Market

OneAPI – Next Generation Value Added Services in the Mobile industry

Show me the money – The future Business models for mobile Broadband Services

How to get success with Value added services on the Mobile Broadband market


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