Our team spoke to Federico Homberg, Head of International Mobile Wholesale at Deutsche Telekom AG, to learn more about the MNOs’ wholesale business, Federico’s views on what a healthy relationship between an MNO and MVNO look like and his opinion on how the e-SIM will impact the telecom industry.
Can you tell us about Deutsche Telekom AG pls?
Federico Homberg: Deutsche Telekom AG employs over 100 thousand people in Germany and focuses on building the network, mobile network, both coverage and speed, and also on optimising technology leadership and customer orientation.
The group’s retail and wholesale business operate separately, which means that neither sides of the business have an impact on each other.
One of the examples of Deutsche Telekom in technology leadership is its fixed-line service in Macedonia, where customers can order their fixed-line via the internet and have it installed and working instantly. Whereas, if the customer went to any other service provider in most other European countries they would have to wait for days or even weeks to have their fixed-line installed.
Another example of technology leadership is in the coverage and speed of its mobile network, ensuring the customer has the best connection, calls don’t drop, etc; In order to achieve this, Deutsche Telekom is moving to 5G coverage, carrying out trials of 5G and putting a lot of intelligence of network out in the antennas, through edge computing – where if you have autonomous driving, you have to make sure that the mobile signal doesn’t have a long way to travel; this is why a lot of the computing power is on the edge of the network, close to the railways or to roads.
What is your role at Deutsche Telekom?
Federico Homberg: As head of International Mobile Wholesale, I work on monetizing free capacity as well as reaching out to mobile virtual network operators to operate in our network.
In Deutsche Telekom’s wholesale unit, which acts as a consultant for the 14 local wholesale teams across different countries, and as a link between them and the headquarter, it’s my role to provide strategic guidance and to make sure the wholesale side of the business remains consistent in its product offering, price and other initiatives the company believes are.
In order to make sure we get the right partners on board, I have to carefully consider all requests by MVNOs wanting to join our network.
I have many requests from companies that want to have access to our network but many of them lack a convincing product proposition, have little industry know-how or have not enough financial backing. Becoming an MVNO is not an easy task. And, we need to make sure that potential partners have the ability and the means to be successful.
What does a successful MVNO/MNO relationship look like?
Federico Homberg: A successful relationship between a MVNO and an MNO is one when they complement each other.
A good example of this is our partnership with Lycamobile, who serves the ethnic segment; In this MVNO/MNO relationship, we are complementing each other because they are addressing a segment which we are not after, and wouldn’t serve otherwise.
My role includes primarily the Mobile Wholesale Business in Europe outside of Germany . This includes markets such as Austria, Hungary, Macedonia, Poland, Montenegro, Czech Republic, Slovakia, Romania, Greece, and the Netherlands I help MVNOs go into business, working together with them to decide which countries they should potentially launch. For existing partners, I also look at their performance and how that can be improved.
What types of projects does Deutsche Telekom work on?
Federico Homberg: We work on a number of projects, supporting many different wholesale business models; From ‘brand reselling’ to working with full MVNOs.
As an example, in the past, we partnered with MTV under a brand reselling MVNO model; In this model, the MVNO brings their own branding, do the distribution and part of the pricing; The technology and customer relation fall under the responsibility of the MNO, which means that in this business model, the MVNO would basically be reselling the MNO product, with a different name tag on it; – This being the simplest business model we support.
We also support full MVNOs, where the mobile network operators rent the mobile network from us, however, different to ‘brand reselling’ model, the full MVNOs own large chunks of the mobile value chain such as in the core network and the service platform.
There are many other business models we support in between the above; depending on the country, we support most of the MVNOs but not all, and for different reasons.
How do you think eSIM will impact the telecoms industry?
Federico Homberg: The eSIM will enable the customer to switch easier from one provider to another. So it will be an opportunity for those MVNOs who have a strong host network.
We have many requests from MVNOs, currently working with weaker operators, who want to move to our network; their lack of network coverage and speed, means their customers are no longer satisfied with their services.
In anticipation of the e-SIM coming to the market, an additional factor to be taken into account is the structure of the customer base. MVNOs with a primarily pre-paid customer base will most likely suffer from a higher churn. One strategic measure to tackle this is the offering of post-paid plans and migration bonuses to existing pre-paid customers.
Another aspect MVNOs need to consider is the eSIM distribution – how they will provide eSIMs to their customers; at the moment, MVNOs provide SIM card manufacturers, such as Gemalto, with a forecasted quantity of how many SIM cards they will need for a certain period of time, the manufacturer then produces the SIM cards and ship them to the MVNOs. With the eSIM, this process might be slightly different and more dependent on the manufacturer producing eSIM profiles rather than physical SIM cards.
Customers will also need to be educated on the use of eSIM since physical SIM cards will be replaced e.g. by a code a customer needs to scan. This will require a different marketing and might be somewhat more challenging for Ethnic players whose customers like to have something in their hands in exchange for the money.
I believe that for the first years of the eSIM coming to the market, customers will be able to either use a sim card or an eSIM from their mobile devices. Although we already have some eSIM devices in the market, such as watches and other wearables, these don’t allow the migration between different providers yet.
Deutsche Telekom is ready to launch the eSIM to its wholesalers however this step will only be made once eSIM has been standardised which should happen early next year.
The transition process should take about two years to get customers used to eSIM, to the point where we have the first devices with no physical SIM cards anymore.
Other players in the industry who will benefit from eSIMs are device manufactures, who will – in cooperation with network operators – be able to install local eSIMs in their products, such as laptops, so that customers can operate outside their workstations without relying on a cable internet or wi-fi.
Why do you think events like ours are important in the industry?
Federico Homberg: First of all, the community is relatively small so, it’s important for us to talk, exchange information and learn what other players are doing, and the your events supports this thought, basically.
Then, there are industry developments, with eSIM being one of them. Currently, it’s difficult to predict what the outcome will be, as that depends on manufacturing price, so nobody knows what the process is, how the customer will adapt, nobody knows what other players are doing regarding eSIM. Such developments can’t be foreseen, therefore it helps talking to other people and getting their views on what they think may happen because they might look into scenarios from a different perspective and see different opportunities, myself or others haven’t thought of, that’s why it’s important to meet in these events and keep in touch.
What are you looking to gain from attending our event?
I am primarily looking to see customers, to see the developments in the industry; for instance, there are device manufacturers who are interested in becoming MVNOs, so it’s important for us, as MNOs, to know what they are planning, so that we can support them in what they are doing, as well as listening to their ideas, and try to come up with a joint solution that works and benefits everybody involved in the business model.
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Join one of our upcoming events: MVNOs Networking Congress, co-located with e-SIM Connect 1 – 2 November, London, and Wholesale Connectivity Convention, 14 – 16 November, Dallas.
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