The Evolution of Digital-First Sub-Brands: Qvantel White Paper Reviews 20 Sub-Brand Use Cases

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Digital-sub brands are a telco success story. By removing the legacy roadblock to digital transformation and starting with a fresh greenfield site many sub-brands are seeing excellent results in a very short timeframe. Sub-brands are out-performing their parent telcos’ across a range of strategic KPIs. In March 2021 McKinsey published an article called “A battle plan for telcos’ digital-attacker brands”. In this, they called out the results that digital sub-brands were achieving. These included:

  • Within four quarters from launch, the typical digital attacker has contributed 23% overall gross additional subscribers (gross adds) to the incumbent operator
  • Total profitability of the digital sub-brand is more than 5% points higher
  • Customer acquisition cost is halved: sub-brand customer acquisition cost is 49% of the customer acquisition cost of the parent company
  • NPS can be as much as 30 to 40% points higher than the incumbent competitors
  • Reduce the “cost to serve” per customer by 50 to 70%
  • Sub-brands do not cannibalise the parent operator’s customer base—typically 70% of the sub-brand’s customers are made up of net new customers

In order to get a view on what types of use-cases are driving these results, Qvantel reviewed the offerings and the digital-first business process of many of the leading digital sub-brands and produced a white paper reviewing 20 of these use cases. The white paper shows that various sub-brands are in different stages of evolution. Many started out selling a single offer consisting of a SIM-only, high data volume, low-cost offer targeted at the youth market. While some sub-brands still have this model, many others have evolved. Offers are becoming more sophisticated. We’re seeing the introduction of data sharing across devices as well as people. Service providers have introduced gamification into reward schemes and community participation. Not only does this reduce costs but it can also increase NPS and loyalty as customers move to become ‘members’ and have more of an emotional attachment to the service provider.

Some sub-brands are bundling reduced-cost content into their offers and others have speed tier services based on different types of data usage (e.g. lower speeds for social, mid-speed for video and high-speed for gaming). Some are also starting to push 5G with offers that are cheaper than 4G, as well as roll out 5G FWA (fixed wireless access) home broadband services. An interesting advance is how many sub-brands are actively promoting ecological responsibility. Some are planting trees on behalf of customers while promoting the purchase of reconditioned handsets. The introduction of eSIMs is also helping sub-brands become greener companies as there is no physical production and delivery. eSIMs can also ensure that the onboarding process can be done in minutes, so it’s not surprising to see more sub-brands offering eSIMs.

Sub-brands have evolved a lot over the past two years. The range of offers and processes has become more sophisticated, but the most successful companies are taking this back-office sophistication and turning it into simplicity in terms of customer experience. App and web-based personalised care, revenue management and marketing are helping deliver self-service apps that are easy to use, yet supported by a new level of agility in BSS. With the advent of standalone 5G, we will see more offers, more partnerships, new business models and new lines of business for sub-brands.

The evolution that we’ve seen in the past 2 years is just the start.


Martin Morgan
Head of Digital Marketing


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