A MVNO usually leases bandwidth at wholesale rates from telecoms providers to provide customers with tailor-made solutions. By purchasing bandwidth, the idea is that new entrants will stay focused on providing unique services that will differentiate them from the big three operators: China Mobile Ltd, China Unicom and China Telecom.

Media reports identified eight companies, including Suning and archrival Gome Electrical Appliances Holding Ltd, as well as e-commerce vendor Alibaba Group Holding Ltd and JD Mall, as finalists for the licenses.

Alibaba and JD acknowledged their applications when approached by China Daily on Monday, but both said they had no further information to reveal at this stage.

MVNOs are typically good at addressing specific market needs, said Anne Bouverot, director-general of the GSM Association, a global industry alliance of mobile operators and related companies.

"In Europe, certain MVNOs are targeting a minority of people who come to work in another country for a few years. For instance, some operators in Germany will combine specific content that Turkish people who reside in the country love to read," she said.

But it also means that they are not necessarily very big, Bouverot noted. "They can be successful only when they focus on a niche market."

To succeed, MVNOs need to possess an existing distribution system and a solid customer base for the cross-selling of products and loyalty programs. These have put companies such as Suning in an advantageous position, said Ng Kuo-pin, an executive partner at consultancy Accenture.