US Mobile is gearing up for eSIM and 5G as the MVNO plans expansion, including retail, after raising $11.5 million in Series A funding from Volition Capital.
Started in 2015, US Mobile has seen growth for its digital-focused brand and anticipates reaching at least 500,000 subscribers within the next two years or so, according to CEO and founder Ahmed Khattak. US Mobile, which hit 50,000 back in 2018, is already well into the 6-figure mark and expects to grow by almost 100% year on year.
“We feel pretty good about getting to that half-a-million-subscriber number over the next 24 months to like 30 months,” Khattak told FierceWireless. “That would be our base line. At this point the growth has been pretty incredible for us, so I feel like that’s where we’d like to get to as a minimum.”
Jeff Moore, principal at Wave7 Research which closely tracks the MVNO and prepaid space, said that if US Mobile could attain those levels, “that would put them on the map as a significant competitor.”
US Mobile rides on T-Mobile and Verizon networks and touts its own software stack. It’s been focused strongly on developing a unique user front-end that provides customers with a variety of easily customizable plans, visibility into data and usage, as well as a flexible backend.
Two of the main focuses following the Volition investment are growing product and engineering team, as well as marketing.
Historically, US Mobile was focused on the niche sub-$15 plan market, with about 90% of investment going into product and engineering and close to non-existent marketing budget. The company has since grown to more than $30 million in annual recurring revenue (ARR), which is double of what it had the same time last year.
With the injection of capital, the MNVO is also looking into a retail presence at national locations.
“We are working with some of the bigger big box retailers,” Khattak said, noting some like Best Buy have done very well working with third parties to distribute and adding that US Mobile is working with multiple retailers. “We still see a lot of value in it. A lot of our users would like to go down the same day to their local Target or these companies to be able to pick up our SIM card. So I would say that is something that is becoming a big part of our strategy.”
Khattak expects a significant retail expansion in roughly the next year.
It would be a first for US Mobile, which currently has online-only sales channels, according to Wave7 checks. And Moore noted the MVNO’s ambitions as a positive.
“We’ve seen a diminished level of competition at national retail from various prepaid carriers, so more competition can only be a good thing,” Moore said. He added that having visibility at big box retailers whether it be device or SIM card sales, can be viewed as a sort of affirmation that a company like US Mobile is a significant player.
Other online-focused MVNOs like Mint Mobile have retail presence, advertising and celebrity endorsements by the likes of Ryan Reynolds, which have been points of differentiation, Moore noted.
eSIM a bigger deal than 5G
Another key focus for US Mobile is bolstering its line of handsets and introducing eSIM capabilities domestically, with the latter about two weeks out.
When it comes to devices US Mobile opted to focus on building its software stack but has now hit a critical mass, Khattak said, where the company wants to evolve the easy experience of buying a plan into purchasing phones.
“We’re working with a partner to provide phone financing for businesses,” he said, aiming to offer more options particularly as 5G rolls out.
While 5G is key, Khattak sees eSIM as an even bigger deal for the MVNO space, although he acknowledged implementation for a lot of companies hasn’t been great so far.
Among capabilities, eSIM allows customers to change carriers digitally without having to swap out a physical SIM card or visit a store. Major carriers do support eSIM in devices like Apple iPhones, but don’t market it widely and historically have been reluctant as it could make it easier to switch. Earlier this year T-Mobile started allowing users with eSIM-compatible iPhones to trial its network for free for 30 days via an app – without having to change carrier or device.
In the next 5-10 years, he said, users should be able to scan a barcode and get provisioned for cellphone service, with software that activates ubiquitously across devices
“I think a lot of demand side [for eSIM] is going to be run by companies like US Mobile,” he said. “Our conversion rates are through the roof.”
It’s already implemented eSIM (embedded SIM) offerings for customers travelling internationally, and is gearing up for capabilities in the U.S. The domestic launch took more time, Khattak said, because of moving parts including working with the SIM card manufacturer, OEMs, and technical complexity that also depended on its host carrier to deliver certain aspects.
“We’re basically two weeks away from launching our eSIM solutions for all our domestic U.S.” plans, Khattak said. “I think implemented properly it’s an absolute gamechanger for us.”
Other digital-first prepaid brands like Verizon-backed Visible, have been active on the eSIM front.
Small business uptake
The MVNO recently introduced Pooled Plans, which let an unlimited number of devices (both smartphones and other connected devices) share data, plus unlimited talk and text.
It boasts a user interface that shows who is using what, with options to add lines or more data as needed. Shared data plans include mobile hotspot and access to 4G LTE and 5G and start as low as $9 per line.
A lot of the uptake for shared data plans has been with small business customers that traditionally might have needed to go with an end-user family plan due to the small number of employees.
Users can create multiple pools within a company for different departments. There’s also capabilities for direct integration into accounting systems. Wave7’s Moore noted that while most carriers offer some sort of family plan with discounts, US Mobile has a certain level of flexibility built in that most others don’t.
“Our small business practice is exploding because of our pooled plans,” Khattak said.
For example, when US Mobile started offering them last quarter, it saw uptake jump from 300 lines to 3,000 lines in one month without any advertising, according to Khattak.
He views shared data plans as the way to monetize 5G in the future, by selling a certain amount of data and then adding lines without discriminating by device.
Updated to correct current annual recurring revenue to $30 million, from previously stated $10 million.