Former Virgin Mobile South Africa CEO Steve Bailey, who is a key figure behind the imminent launch of new telecommunications player me&you mobile, believes the number of mobile virtual network operators (MVNOs) in South Africa will mushroom in the next five years.
MVNOs leverage third-party operators’ network infrastructure to provide services to consumers under their own brands.
Bailey, who heads MVN-X, the “mobile enablement” company providing services and support for the launch of me&you mobile, believes 10% of South African mobile subscribers are likely to be using an MVNO by 2020. Today, MVNOs own less than 1% of the market.
Bailey says there have been two significant changes in South Africa’s MVNO market that will facilitate this strong growth.
The first is that Cell C has opened its network to wholesale partners for the first time. “Cell C had Virgin, but there was no intention to add more,” he says.
Now, the mobile operator has a division dedicated to providing wholesale services and facilitating the entrance of MVNOs into the market, says Bailey.
Cell C launched Virgin Mobile in South Africa in 2006 as co-shareholder with Richard Branson’s Virgin Group. The operator has since sold its stake.
“Cell is aggressive and supportive [in wholesale],” says Bailey.
The second big change supporting the MVNO market is the large decrease in recent years of termination rates — the fees the operators are allowed to charge each other to carry calls between their networks. “The lower rates have created the opportunity for people to come in on voice and compete with the other networks,” he says.
“And now all the networks have increased their prices, which has created a bigger gap between wholesale and retail. This creates a lot of opportunity.”
Bailey says the entry into the market of enablement companies like MVN-X will also grease the market’s wheels. “It’s no longer a big endeavour to start an MVNO like it used to be. All these factors will mean we are going to see a lot of MVNOs coming.”
He says that in Germany, MVNOs control about 20% of the market by subscriber numbers. In the UK, the figure is over 10%. It makes sense that South Africa plays catch-up to other markets, Bailey believes. — © 2015 NewsCentral Media
