Telcos may not have benefited from the massive investments they have spent on infrastructure but partnering with market-savvy mobile virtual network operators (MVNOs) and enablers (MVNEs) offers an opportunity to be vital parts of modern society with its predilection to use mobile phones to manage their lives and finances.
We can see the outcome in China.
In the Chinese market, Alibaba and its fintech affiliate Ant Group (operator of Alipay) have pioneered a "super app" ecosystem that converges Mobile Virtual Network Operator (MVNO) services with Fintech to create a seamless digital lifestyle for subscribers. : Alipay has evolved from a payment tool into a "one-stop" platform where users manage their mobile plan (MVNO), make investments (Yu’E Bao), buy insurance, book travel, and pay for daily services like products, utilities and ride-hailing.
Mike McLaren published an article today showing the same convergence in The West and Africa whilst offering a really interesting reframing from convergence to a new overall ‘operating system’ delivering the same benefits that Alibaba and Alipay offer Chinese subscribers. Herman Frank is the CEO of Gigs a MVNE but much more besides.
"The CEO of Gigs Frank attributes Gigs’ traction to what he calls an operating system approach to connectivity. Where the previous generation of vendors required new entrants to assemble a layer cake of disconnected systems - each with its own integration, timeline, and engineering overhead - Gigs provides a single platform that handles the full stack.
Klarna’s US rollout runs on Gigs, on AT&T’s network. Sezzle’s $29.99 unlimited plan runs on Gigs, also on AT&T. Tide’s embedded business phone number in the UK runs on Gigs. Revolut Mobile’s full mobile service - launched in partnership with Vodafone - runs on Gigs. Neobank Nubank used Gigs to launch its travel eSIM product in May 2024, a stepping stone before NuCel. Wealthsimple, Lendable, and OnePay are also in the Gigs client roster.
Frank frames the ambition in broader terms. Gigs, in his words, is on a mission to embed connectivity directly into the technology platforms that already power billions of consumers and enterprise employees - a generational shift in how telecom distribution works, from standalone carrier relationships to connectivity that lives wherever the users already sit.
Same platform. Different fintechs. Different markets. That is not simply coincidence, but rather the beginning of consolidation."
Mike McLaren
In December 2024, Gigs formalised a strategic alliance with Vodafone UK - not as an MVNO tenant on the network, but as a co-enablement partner, jointly lowering the barriers for any UK business to launch its own mobile service in weeks rather than years. The platform that started by helping fintechs navigate telecoms is now embedded in the infrastructure of one of Europe’s largest operators. Vodafone is a major shareholdert of South Africa's Vodacom which itself is a large shareholder in MNO Safaricom. The latter, together with MTN have pioneereed mobile money in Africa ( M-PESA and MoMo) incuding offering digital payments and financial services to peoples without access to banks.
Neo banks in Africa are not being left behind though with four new Bank-MVNO ventures including Capitec-Capitech Connect, and JamboPay.
Platform economics
Back to Gigs, and the Fintechs Revolute, Klarna, Sezzle, Tide and more. Gigs is not competing with anyone on that list. Gigs wins when Revolut wins. It also wins when Klarna wins, when Sezzle wins, when Tide wins. If one of these companies dominates and acquires the others, Gigs probably powers the acquirer too.
This is the compelling economics of platform infrastructure. It is the same logic that made Stripe interesting before payments became obvious, or what made Twilio compelling before messaging APIs were everywhere. The companies using the infrastructure get the headlines. The companies building the infrastructure capture margin across the entire category.
MNOs in partnership with MVNEs can deliver fintech ecosystems in much shorter time spans and the combined partnerships deiver the same ‘SuperApps’ that Alibaba and Alipay pioneered in China. Africa, with so many of its people not being able to access banks, have already embraced mobile money.MNOs have proven the market whilst the next stage of user expansion is ripe for a much wider spectrum of partners.
But there is a far more interesting question that McLaren asks underneath that one: in a world where the underlying infrastructure is consolidated into a few platforms, who actually captures the value?
In the early stages of any platform shift, the infrastructure builders are undervalued relative to the companies that get the consumer press. That dynamic very rarely lasts however. As the MVNO wave consolidates from announcement to operating reality, and as the companies running on these platforms compete for customers, market share, and eventual consolidation - it seems intuitive that the platforms underneath them will keep winning.
I strongly urge you to read McLaren's article The Platforms Powering Fintech’s Mobile Moment where he goes into much more detail. Nobody can be complacent!
The Chinese model I first described is likely to expand the eCommerce ecosystem including logistics, i.e. direct competition with Amazon, rather than expand geographically into The West, Africa and LATAM.
Don't relax though- Whether a current rails service provider, fintech, MVNO or MNO there cannot be room for everyone to make viable margins. Best make sure that you do over the next decade. Execute the Go-to-Market strategy that avoids you being disinermediated
Telecom operators (telcos) have played a critical role in laying the foundation for the massive, technology-driven economic and financial gains of the 21st century. Yet for most of that period, the industry hasn’t managed to share in much of the spoils. While established tech titans and emerging start-ups alike were profiting from successive generations of wired and wireless infrastructure, the telcos that deployed and operated those networks found themselves weighed down by the crushing capital burden as well as intense new competition. That initial period from the late 2000s to 2015 put great pressure on the industry’s revenues and margins, leaving it with an ROIC that fell below the cost of capital.
unknownx500
