Over the past five years, South Africa’s mobile virtual network operator (MVNO) market has seen a surge of new entrants, with many players confident that there is still ample room for growth. MVNOs, which are cellular service providers that lease network capacity from established mobile network operators (MNOs) rather than owning their own infrastructure, have become an essential part of the country’s telecommunications landscape. This expansion is not only reshaping market dynamics but also driving innovation and offering consumers more choices in a market that was once dominated by a few major players.
The Evolution of South Africa’s MVNO Market
The concept of MVNOs in South Africa was first introduced by Virgin Mobile, which began operations on Cell C’s network in 2006. Although Virgin Mobile ceased operations in 2021 and was later acquired by Huge Group, it paved the way for other MVNOs to enter the market. Today, Hello Mobile, which launched on Cell C’s network in 2010, holds the title of the oldest surviving MVNO in the country.
Cell C has played a pivotal role in the growth of the MVNO sector in South Africa. Despite no longer operating its own radio access network, Cell C remains the largest enabler of MVNOs in the country. The company’s dominance in the mobile virtual network enabler (MVNE) space persisted until 2020, when MTN officially launched its wholesale product offering, allowing other players to enter the MVNO market more easily. Although MTN had previously allowed companies like Afrihost and Axxess to offer MVNO services on its network, it wasn’t until 2020 that this became a widely available MVNE service.
In addition to its wholesale services, MTN now manages and maintains Cell C’s radio access network for both its prepaid and MVNO customers. This collaboration between the two giants has further strengthened the MVNO ecosystem in South Africa, allowing for more robust competition and service offerings.
Current Market Dynamics and Consumer Preferences
The entry of multiple MVNOs into the South African market has significantly altered the competitive landscape. A recent survey by Analytico, involving 3,800 respondents, revealed that Afrihost’s Air Mobile is the most popular MVNO among South African technology professionals, garnering 38% of the votes when asked which MVNO they would choose if signing up today. This preference underscores the growing importance of MVNOs in the eyes of tech-savvy consumers who value flexibility and competitive pricing.
Banks have also become major players in the MVNO space. Capitec Connect, for example, is now regarded as South Africa’s largest MVNO, recently surpassing one million active SIMs. FNB Connect, another banking MVNO, is not far behind, with 879,000 active SIMs in 2022 and a target of reaching one million in the near future. These banking MVNOs leverage their existing customer bases, offering discounted or even free mobile services as part of broader financial packages, which has proven to be a successful strategy.
FNB Connect’s CEO, Sashin Sookroo, highlighted how the increasing competition in the MVNO market has actually benefited their business. “I think the advent of more MVNOs and more competition has got customers thinking about what they are missing out on,” Sookroo said. This sentiment is echoed by Cell C, which continues to see significant and growing interest from new MVNO clients.
Stephen Morony, Cell C’s Chief Officer of Wholesale, emphasized that the high demand for MVNO services highlights the attractiveness of Cell C’s network and the overall health of the MVNO market. “This demand showcases the flexibility and comprehensive support Cell C offers,” Morony noted. Looking ahead, he stated that Cell C’s focus will be on retaining current business, fostering new opportunities, expanding service offerings, and building scalability to meet the growing needs of the MVNO market.
Innovation and Future Prospects
The expansion of MVNOs in South Africa is not just about increasing competition; it’s also driving significant innovation. MVNOs are known for their ability to target niche markets with tailored service offerings, something that larger MNOs might overlook. This has led to the development of unique service plans that cater to specific consumer needs, whether it's affordable data packages, specialized services for particular communities, or innovative customer engagement tools.
Moreover, the flexibility of the MVNO model allows these operators to quickly adapt to changing market conditions and consumer preferences. As technology evolves, so too will the services offered by MVNOs, ensuring that they remain relevant and competitive in a rapidly shifting telecommunications landscape.
In conclusion, the expansion of MVNOs in South Africa over the past five years has had a profound impact on market dynamics and innovation. With the support of major players like Cell C and MTN, and the increasing consumer demand for flexible and competitive mobile services, the future of MVNOs in South Africa looks bright. As more entrants continue to explore this space, the benefits of increased competition, improved service offerings, and greater consumer choice will only continue to grow.
