23 | MAR | 2019
Carlos Slim dominates Mobile Virtual Network market in the U.S.
The nearest competitor of Carlos Slim’s company was Virgin Mobile, with 17 million clients in 14 countries - Photo: Dario López/AP

Carlos Slim dominates Mobile Virtual Network market in the U.S.

05/12/2018
16:22
Carla Martínez
Mexico City
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Tracfone offers pre-pay services to a customer base made up of millions of undocumented immigrants

Tracfone, a mobile virtual phone company owned by Carlos Slim, is now the largest in the world with 23.1 million users in the United States.

An analysis of the Virtual Network Operators (MVNO) market conducted in 2018 by the Federal Telecommunications Institute (IFT) indicated that the nearest competitor of Carlos Slim’s company was Virgin Mobile, with 17 million clients in 14 countries.

Mobile Virtual Network Operators (MVNO) are companies in charge of “renting” internet company networks with infrastructure and spectrum, buying voice minutes, messages and data, to offer mobile phone services to regular users.

Operators in the U.S.

The study showed that there are currently eight traditional operators with a mobile phone tele-density of 147 lines per every 100 inhabitants in the United States, where there is also an extremely active market of mobile virtual network operators.

The United States also has 133 mobile virtual operators and around 22.9 million lines; this means that seven out of every 100 people have signed up for mobile phone services with a virtual mobile phone company.

“The MVNOs and other wireless resellers usually adjust to the regulatory definition of the Commercial Mobile Radio Services (CMRS), even if they have no production facilities and simply resell services of other suppliers,” the report states. According to the report issued by América Móvil for the first quarter of the year, Tracfone had 21.8 million subscribers, 8.2% less than the year before, since 333 thousand lines were disconnected.

Tracfone’s overall gained income amounted to 2.40 billion dollars during said period, which represented a 2.6% increase compared with the 1.98 billion they made during the first quarter of 2017.

The company explained that, as the company has focused on customers with high internet use, average revenue per user has shown a significant increase. From January to September of the present year, there was a 10.7% increase, which amounted to 26 dollars per subscriber.

Jorge Bravo, an analyst from Mediatelecom Policy and Law, commented that Tracfone’s success was due to the way in which it seemed to recognize users with a low internet use and who relied on prepaid services. Most customers who fit into this segment were of Latin and Mexican origin, as they are used to communicating with their families that way.

“Furthermore, since their customer base is made up of immigrants, prepaid services allow them to stay connected without having to produce documents in order to subscribe to mobile phone lines, which could jeopardize their permanence in the United States, as does the use of credit cards and any other form of identification,” Bravo indicated.

The company has enjoyed a huge success due to the millions of people who find themselves in said situation and are in no need of hiring additional services.

“Tracfone is exploiting a cultural situation with a prepay model that its consumers are already acquainted with in their countries of origin. It is more economical to take their phones to the supplier and activate a chip, which doesn’t put them in danger as immigrants,” said the analyst.

Furthermore, the company has succeeded because of the Lifeline program by the U.S. regulator FCC, which grants subsidies for people with low incomes. The company is thus capable of offering their services at an even lower price.
 

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