SEM-CFA Estimation of Factors that Influence the Growth of Mobile Virtual Network Operators: Case Study from Kenya

Abstract

The core problem this research addresses is the puzzling underperformance of Mobile Virtual Network Operators (MVNOs) in Kenya. Despite a thriving mobile industry and an increase in the number of registered MVNOs, their collective market share has paradoxically declined from 4% to about 2% over the past decade. To investigate this, the study employed a robust statistical method known as Structural Equation Modelling and Confirmatory Factor Analysis (SEM-CFA) to pinpoint the key factors driving or hindering MVNO growth. The key findings revealed a clear divide: factors such as public perception, MVNO-specific strategies, and collaborative value chains positively influence growth, while barriers created by established Mobile Network Operators (MNOs) and regulatory limitations from Government Agencies hold it back. Crucially, the discussion highlights that the sector's poor performance is primarily due to factors unique to the Kenyan market. In conclusion, this research provides a practical framework for launching and developing MVNOs by identifying these specific influences. The main recommendation is that for the Kenyan MVNO sector to thrive, stakeholders must directly address the 44% of growth factors that are unique to the local context, as solving these specific issues is the key to alleviating the sector's long-standing problems.