Walmart’s MVNO Bait starts paying for failures and adds fewer users

For example, from the fourth quarter of 2023 to the first quarter of 2024, Walmart’s MVNO had added 1.5 million customers, and in previous periods it had even added up to 3.5 million users.

Bait had managed to add more users, thanks to the fact that the telephone service was integrated into the Walmart ecosystem where, for each purchase, users can receive a free MVNO chip, as well as extra gigabytes. Number portability has also become another channel to attract more customers.

But now this pace seems to be slowing down. Erick de la Cruz, an analyst at the consulting firm Select, said that the exponential growth that Bait had last year and in the first three months of 2024 could saturate Bait’s target market, making it more difficult to maintain the same rate of user additions, which would explain why the company is now looking to slow down this trend.

“Let us remember that Walmart’s MVNO strategy is not to have users in the mobile market, but to generate demand for its digital ecosystem (health, advertising and financial solutions such as Cashi to achieve a digital ecosystem,” said the specialist.

Meanwhile, Jorge Bravo, general manager of the Digital Policy Law consultancy, explained that the decline in Bait’s customer addition rate would also be related to a change in the company’s own strategy. Walmart’s MVNO would now seek to retain and improve the Average Revenue per User (ARPU), the main financial indicator for telephone companies, in order to recapitalize the investments it has allocated to its telephone service.

In telecommunications, the number of new customers is not enough to have stable operating margins. According to information from the consultancy The Ciu, the ARPU of Bait is currently 72 pesos, while that of large operators such as Telcel is 177 pesos, more than double that of the OMV.

“Bait must have very low-consumption users and even inactive lines. It is possible that in future quarters we will see a decline as Walmart and Bait’s marketing strategy changes,” said the specialist.

Service failures

Erick de la Cruz said that another issue that could also be related to a lower subscription rate is the recurring failures that have occurred within the company’s operations. Since April, Bait has had several outages in its voice and data services, which has led to the anger of consumers. The company has even had to reward its customers with free gigabytes in order to retain them in its operation.

In April, Altán, the company that leases its infrastructure to Bait and other MVNOs, assured Expansión that the problems in its network are due to increased user traffic that has saturated its maintenance windows, those that allow Altán to support its capacity.

The Federal Institute of Telecommunications (IFT) explained to this media that Altán’s problems are due to failures in the equipment that registers users and in turn enables telecommunications services.

But the problem has not been fixed. Users on the official Bait on X account continue to report interruptions or complete service outages. A few days ago, several users complained directly to the company through Elon Musk’s social network.

Bait is going through a difficult time where its service has been affected by the number of clients it has, but at the same time it must look for new alternatives that allow it to retain and increase its clients’ spending.