The Nigerian Communication Commission (“NCC”) introduced MVNO License on August 11, 2022 to be called “MVNO License” thereby creating business opportunities to entrepreneurs willing to take advantage.

Valued Added Services (VAS) license is embedded in the MVNO License therefore MVNO can carry out Value Added Services that are not currently provided by the MNOs without procuring separate VAS License. However, the MVNO licenses are forbidden from distributing VAS content created and managed by other VAS providers.

The main target of this “NCC” initiative is to direct mobile network services to unserved and underserved areas (e.g. remote rural areas) and MVNOs initiatives has been identified to play an important role in connecting and bringing access to mobile services to these regions.

Before now, MVNO is an initiative already been use in the western world including Europe and United States of America to spread telecommunications services across nooks and crannies of their countries.

The full meaning of MVNO is “Mobile Virtual Network Operators License.

MVNO is a wireless communication service provider that resells mobile network services bought at wholesale prices from Mobile Network Operators (MNOs), such as 9mobile, Airtel, MTN and Glo, for discounted amounts and resells it to consumers (End Users) at reduced retail prices under its own business brand. However, MVNO lack the network and core infrastructure to deliver network services; therefore, MVNOs depend on the host MNO to provide this. Therefore, the MNVO depends largely on the infrastructure of a fully licensed mobile telecommunication service provider.

This initiative will also help MNOs optimize use of their network resources. Rather than taking a loss, the MNO makes a small profit by offloading capacity in bulk at wholesale prices.

In furtherance of this, the “NCC” issued the License Framework for the Establishment of Mobile Virtual Network Operators in Nigeria (“the License Framework”).

Some notable provisions of the License Framework are:

(1) First, there must be a contract agreement between the MVNO and the MNO on their own terms. The agreement can either be in the form of “Revenue Sharing Agreement’ or “Wholesale Agreement”

The Agreement must be filed with NCC before applying for the MVNO License.

(2) The License is available under 5-Tier Systems

TIER MVNO TYPE LICENSE FEES
Tier 1 *SVO 35M
Tier 2 *SFVO 60M
Tier 3 *CFVO 130M
Tier 4 Aggregator/Enabler 200M
Tier 5 *UVO 500M

*SVO = Service Virtual Operator
*SFVO = Simple Facilities Virtual Operator
*CFVO = Core Facilities Virtual Operator
*UVO = Unified Virtual Operator

The best MVNO type depends on the specific market needs, the strategic goals of the MVNO, and the nature of the agreement with the MNO.

Tier 1 or 2 license are more of a plug-and-play, but inherently more dependent on the MNOs and will need a solid voice to ensure good service from the MNOs network team. The lower-tiered MVNOs are more closely dependent on the MNO’s efficiencies than the higher-tiered MVNOs.

Aside from the licensing requirements, applicants are required to have one (1) unique technical partner and observe its Local Content Policy.

License tenure and payment plan
The MVNO License is valid for a period of ten (10) years with an option to renew the license for another 10 years.

Applicants for tier 1 – 4 licenses are required to pay 5% of the applicable license fee as non-refundable administrative charges, while tier 5 applicants are expected to pay Fifty Million Naira (N50,000,000.00).

Detailed Services under the Tiered System

The details level of services provided per each Tier are enumerated below:

TIER 1 SERVICES VIRTUAL OPERATOR (SVO)

▪ SVOs can offer services to customers without owning intelligent or switching network infrastructure.
▪ Host operators have the responsibility of providing wholesale capacity to the SVOs to provide their products and services. Thus, the host operator has a strong effect on the pricing of the SVO’s services.
▪ The VAS license is included in the SVO license; therefore, where an SVO provides VAS services, the conditions within the VAS license must also be complied with.
▪ The SVO can run its Short Message Service Centre (SMSC), which is a mobile phone network that handles text messages operations.
▪ The SVO licensee is in control of its brand, sales, distribution channels, device and phone sales and management, and customer relation platform.
▪ The tariff control here is very limited.

TIER 2 SIMPLE FACILITIES VIRTUAL OPERATOR (SFVO)

▪ The SFVO has more control over its value chain than the Tier 1 licensees and can distinguish itself from the host.
▪ The SFVO can set up its intelligent network but does not have core switching and interconnect abilities.
▪ In addition to the features from Tier 1, SFVO has the ability to own its Home Location Register (HLR), Equipment Identity Register (EIR), Authentication Centre (AUC), Home Subscriber Server (HSS), own more customers and own and issue its own SIM.
▪ SFVOs can have their own short codes for customer care services.
▪ In relation to inbound calls, SFVOs share revenue structure with their host operators.
▪ The SFVO can generate its revenue because of its ability to control its pricing and tariff structure.

TIER 3 CORE FACILITIES VIRTUAL OPERATOR (CFVO)

▪ In addition to the features from Tier 2, CFVOs can launch and operate a full core network with interconnect and switching capabilities, such as Mobile Switching Center (MSC), Gateway Mobile Switching Center (GMSC), Packet Data Network Gateway (PGW), Serving Gateway (SGW) and Mobility Management Entity (MME). However, for radio access, they rely on their host operators.
▪ Unlike SFVOs, CFVOs have full control over their tariff structure as they do not share revenue structure for inbound and outbound calls.
▪ The Commission urges CFVOs to target unserved and underserved areas and offers subsidised requirements for CFVOs who operate in these areas.

TIER 4 VIRTUAL AGGREGATOR /ENABLER

▪ The Virtual Aggregator/Enabler is a middleman between the Mobile Network Operators (MNOs) and the other Virtual Operators. The Virtual Aggregator/Enabler buys network services from MNOs in bulk and then resells to other Virtual Operators.

▪ The Virtual Aggregator generally known as Mobile Virtual Network Aggregator (MVNA) has the liberty to choose the value chain it wants to aggregate. Thus, it can aggregate Virtual Operators from Tier 2 if it controls its intelligent network and content delivery platforms but relies on the host operator to provide switching and interconnect purposes.

▪ The Enablers generally known as Mobile Virtual Network Enablers (MVNEs) provide the platform other Virtual Operators need for business and operations support systems processes which in turn gives the Virtual Operators the opportunity to center their attention on marketing, sales and distribution aspect of their business.

▪ In unserved and underserved areas, the Virtual Aggregators/ Enablers can perform the role of CFVOs.

TIER 5 UNIFIED VIRTUAL OPERATOR

▪ The Unified Virtual Operators (UVOs) can choose to operate at whichever tier and offer services at such level.

▪ UVOs can enter into a Shared Rural Coverage Agreement with a licensed spectrum owner to directly provide services for customers in unserved and underserved areas.

▪ They can offer all the services in Tiers 1 – 4

Becoming an MVNO
Becoming an MVNO is challenging, but with the right approach, it can be a profitable venture. To better your chances of launching a successful MVNO business, you should start with the following:

• Conduct extensive market research to gauge demand and competition.
• Craft a thorough business plan.
• Familiarize yourself with regulatory requirements and obtain the necessary licenses.
• Negotiate a wholesale agreement with an MNO for network access.

At present the applications for MVNO license has been suspended after initial deadline of 11 of October 2022. Futures lifting of the suspension is inevitable