Mexican Cable Operator to Launch MVNO

Mexican Cable Operator to Launch MVNO

Mexican cable operator Megacable will officially launch its MVNO to all users in November, following a three-month trial with its own customers earlier this year, according to a news report that quotes the company’s deputy general manager, Raymundo Fernandez. “By the end of November we will officially launch our MVNO service. We will have very competitive packages and rates,” Fernandez said.

The service will use the country’s Red Compartida, a wholesale 4G/LTE shared network on the 700MHz band. In January, Megacable issued a SIM card for existing TV and broadband customers in the cities of Guadalajara, Puebla, Leon, Morelia, Toluca, Tepic and Colima to test the service for three months at no extra cost. 

Tarifica’s Take

Mexico’s MVNO market is very undeveloped so far. As of the end of the second quarter of 2019, the country had 118 million active mobile lines, of which approximately 1.4 percent were via MVNOs. The national regulator IFT predicts that by the end of the year, that percentage could reach more than 1.6 percent.

So clearly there is a lot of room for growth in the Mexican MVNO space, even if that growth is going to come slowly. In general, MVNOs do best if they launch with pre-existing user bases, brands and reputations that they can leverage. Some exploit tightly targeted demographics, even to the point of being community-based. Other are positioned as youth brands of already-established MNOs.

In this case, we see a reasonable basis for launching an MVNO—a cable operator adding mobile telephone and data to its existing cable service for a de facto double play. At the beginning of the year, for its three-month trial of the MVNO, Megacable offered its cable customers the opportunity to add mobile service free of charge, an undoubtedly persuasive offer. If the service was satisfactory, pricing will be the major determining factor as to whether those Megacable users will sign up for the service at launch next month.

Now Megacable will offer the MVNO service to all Mexican mobile users, regardless of whether or not they are customers of the company’s cable service. The goal here will be not only to garner as many subscribers as possible for the MVNO but to use the double play offer to add subscribers to the cable service as well. Again, if the price is right, this strategy could be very favorable to the operator in terms of its MVNO and its core business alike. Presumably running the mobile service over the national shared network is more cost-effective than entering into an exclusive arrangement with one mobile operator, which may enable Megacable to keep the cost of its MVNO service low enough to maximize customer acquisition and retention.