In a YouTube video shared in early November 2020, Mexican influencer Luisito Comunica stands in an office next to an antenna labeled “Altan Redes – 5G.” 

With his trademark curly hair and perky demeanor, Luisito Comunica — whose real name is Luis Arturo Villar Sudek — explains how this technology works. “This thing [5G] will revolutionize the planet,” he said, “and PilloFon will be the first provider to offer 5G coverage in Mexico. Hey: sounds cool! Am I posting this as self-promoting clickbait? Of course I am, but it’s true!”

PilloFon is a telecomms company that Luisito Comunica launched in mid-2020, in partnership with Diri Móvil, one of the newest players in the industry. It is not a fully fledged telecommunications operation on the ground though. PilloFon is a mobile virtual network operator (MVNO), a company that buys wholesale services from larger telecomms and then bundles and resells them to individual customers.

In less than a year, PilloFon became Mexico’s fourth fastest growing telecomms company in terms of users. It also has more followers on Instagram than Telcel, the country’s largest telecomms company, which has over 76 million customers. 

PilloFon’s silly-sounding brand name has been carefully crafted from a word that Luisito Comunica frequently uses in his videos: pillo, a term that means “mischievous” in Spanish, plus the suffix fon (for phone). All of Luisito Comunica’s followers are pillos in the sense that they’re curious, adventurous, and fun — just like the influencer’s on-screen persona.

It is precisely this cultural code that attracted Diri to him in the first place. “We approached Luisito Comunica just over a year ago; he was the most obvious, most logical personality with whom to build a telecomm company because of his reach and because he has a clear voice and generates plenty of trust and empathy,” said Alejandro Corsi, CEO of Diri. “He’s very authentic.”

Luisito Comunica was a pioneer in the monetization of authenticity in Mexico. He started a travel vlog on YouTube in 2012 to great acclaim. He has since used his channel to branch out into several business ventures, including a tamarind-flavored tequila and a clothing line. 

With over 37 million YouTube subscribers, Lusito is the second most followed vlogger in Mexico. In third place sits Kimberly Loaiza, who has 5 million fewer, but that has not stopped her from also recently launching her own telecomms company, Space Móvil, with Diri. 

But the value of MVNOs wasn’t all that clear to YouTubers — or even customers — at first.

“We had a superior product with larger and faster coverage that costs 60% less,” said Yago Amerlinck Huerta, CMO at Diri. “But when we tried to tell people, they thought it was too good to be true.” That was when the company came up with the idea of looking for personalities that conveyed “trust, but also helped us spread the voice,” he added. 

Diri approached a few other YouTube influencers and proposed creating phone companies for them. Amerlinck says they all rebuffed his advances. The YouTubers “thought a deal with us could potentially close the opportunity of working with Telcel,” he explained.

But there was one thing that tailor-made MVNOs could offer that a giant like Telcel never could: creative freedom. Diri’s partnership allowed Luisito Comunica and Loaiza to each choose their telecomms company’s name, branding, and marketing. The division of creative labor fit well within this particular business model: “We’ve always wanted to reach different groups with a value proposition that talks to their lifestyle and gives them a sense of belonging,” said Corsi.

It was a perfect fit that came about almost accidentally.

Upstart mobile operators are beating the old guard thanks to social media, bad news for the likes of Richard Branson.

For the better part of the past two decades, Telcel has been the dominant telecomms operator in Mexico. The company, owned by billionaire Carlos Slim as part of his América Móvil conglomerate, controlled almost 70% of the country’s mobile phone lines in 2013. Data from Mexico’s Federal Telecommunications Institute reported 103.1 million subscribers nationwide by the end of that year, of which 72.5 million were from América Móvil.

It was this overwhelming market dominance that led to reform later that same year. The bill, still referred to as the Telecoms Reform, shook up the industry and unwittingly opened the door to influencer-led phone companies. 

For the Mexican market, MVNOs were pitched as the most efficient way to increase competition for Slim’s market dominance overnight. Telcel was to share its towers, antennae, ducts, optic fiber, and other infrastructure with existing competitors — such as AT&T and Telefónica Movistar — and with newer ones, like Altán Redes, created in reform’s wake. 

Not having to invest in infrastructure or network operations is a potentially lucrative business model. A company can create an MVNO, license phone services from the big telecomms companies in bulk, and have marketing be its largest expense. This helps explain why there are now 27 MVNOs operating in Mexico. Their user base is growing faster than established operators like Movistar. 

MVNOs don’t directly compete with the big telecomms companies. Rather, they “complement them since they use the same infrastructure to reach certain markets that are traditionally ignored,” said Jorge Bravo, general manager of Digital Policy & Law, a trade publication.

PilloFon and Space Móvil are far from being the first MVNOs in the country. Richard Branson’s Virgin Mobile launched in 2014, supported by Movistar’s infrastructure. A year later, it had amassed over 700,000 subscribers, making it Mexico’s largest MVNO. But now, Virgin Mobile has lost over a quarter of its mobile phone customers.

“The MVNO market in Mexico is very interesting because it’s always shifting,” said Bravo. “In the beginning, it was just Virgin Mobile. But now they’re not even investing in marketing, and it has been surpassed by others, like FreedomPop.” 

This U.S.-based MVNO was launched in 2017 and now has almost 35% of all MVNO subscribers in Mexico. It came to own the largest share of the market through a simple formula: FreedomPop is owned by Dish, a satellite TV company. On signing up to Dish, subscribers would get a free FreedomPop SIM card. 

Mexicans on average stream 39 hours of video a month.

It was a form of service bundling that preceded the formula that would be introduced later on by influencers — who, instead of providing TV programming, sold the phone line as a chance to be part of a community. 

To telecomms executives, the idea of hiring vloggers to front MVNOs made more and more sense. Though there was a clear overlap between mobile phone and satellite TV users, the overlap between fans of YouTube personalities and cellphone users was even clearer. 

YouTube is a data-heavy app. About 1GB — more than a third of the average Mexican’s monthly data use — allows a user to watch over five hours of videos. Mexicans on average stream 39 hours of video a month, according to a Nielsen report.

Big telecomms companies — like AT&T, Telcel, and Movistar — quickly honed in on this market, offering several prepaid data plans tailored to these needs. But MVNOs now have their own competitive offering; PilloFon, for instance, offers an unlimited data plan that costs 2.4 times less than a 30GB plan from Telcel. 

Corsi and Amerlinck say they want to reach a million users within the next five years, when the MVNO market is expected to have snatched 20 million users from the big telecomms companies. Both executives mention that Diri’s next bet will be to recruit gaming influencers to create their own brands. Judging from the YouTubers’ mounting success, the influence of their strategy might just be taking off.