Telco is one of those rare industries that has largely resisted disruption, especially at a structural level. Mobile network operators (MNOs) such as BT and AT&T still own the underlying telecoms infrastructure. Meanwhile, customer-facing mobile virtual network operators (MVNOs) like Tesco Mobile, which are carried on MNO infrastructure, have until now led on providing products to businesses and consumers. However, this established telco setup is undergoing a seismic shift, and this is creating a significant opportunity space for pioneering startups in a huge $3 trillion market, including next-generation B2B software companies.
The catalyst for this shift was Apple’s release of its first eSIM-only phone in 2022. For the first time ever, billions of people no longer needed to go to a mobile provider for their SIM cards.
This “unbundling” created a new opportunity for businesses to provide data plans and fundamentally moved the dial on who can own the customer in the telecoms space. The manufacturer? The MVNO? Potential ‘superapps’ selling users an in-app data plan?
Widespread e-SIM adoption is already challenging the status quo. Well-funded new providers have emerged over the past four years, with companies already showing impressive traction including eSIM marketplace Airalo, the world’s first telecom-as-a-service platform, Gigs, and eSimGo, a startup enabling travel companies to offer data to customers globally. Some of these startups also offer novel “MVNO-as-as-service” offerings, which have created a new B2B2C opportunity. These companies are proving successful because they provide enterprises with a cheaper and easier way to deliver mobile connectivity to their customers.
The future looks bright for these next-gen startups, although we do see a few reasons to be cautious. There is direct competition from incumbents to consider, and the fact that the product-market fit of new-age D2C eSim providers is yet to be fully proven. An entire ecosystem is being reimagined, and we’re closely watching the exciting disruptors emerging. Here is our market map of the space today:
- Read our piece from November 2023 on E-Sims and “MVNO-in-a-box”: Is the Telecoms Sector Finally Ready to be Disrupted by Next-Gen B2B Software?
- If you’re a founder innovating in telecoms, please get in touch with Norman Fiore (norman@dawncapital.com), Mina Mutafchieva (mina@dawncapital.com), Shamillah Bankiya (shamillah@dawncapital.com) and Zoe Qin (zoe@dawncapital.com).
