For Cell C, MVNOs are now big business - TechCentral

For Cell C, MVNOs are now big business

While Vodacom and MTN appear to be allergic to mobile virtual network operators (MVNOs), Cell C is proving it’s possible to build a significant business from them.

With the launch of Standard Bank Mobile on Wednesday, Cell C now has 19 such virtual operators using its infrastructure to provide mobile services to their retail clients.

Other MVNOs include Virgin Mobile (the first to launch in South Africa, and reportedly now possibly for sale), FNB Connect and Mr Price Mobile. All piggyback on Cell C’s infrastructure.

Since 2014, Cell C has actively courted MVNOs, and has created a wholesale division specifically to serve them.

And it appears to be working well for the country’s third-to-be-licensed mobile operator. The 19 MVNOs on its network have 1.7 million customers between them, and Cell C generated revenue of R486-million from these companies in the first half of 2018. Assuming some growth, it appears likely the annualised figure will easily top R1-billion — year-on-year growth in the first half of 2018 compared to the same period in 2017 was a staggering 51%.

“It’s still early days, but we estimate the revenue market share of MVNOs in South Africa to be approximately 3%,” said Björn Flormann, who runs Cell C’s wholesale business. “The model is gaining momentum locally as big brands, like Standard Bank, come on board and more businesses seek new revenue streams.”

Market saturation

Flormann said MVNOs emerge as a result of market saturation, declining prices and the need by customers for specific solutions.

“While the MVNO concept is still relatively new to the South African market, by 2015 there were more than a thousand MVNOs live in 75 countries. The MVNO model offers businesses like banks and retailers the opportunity to differentiate and provide niche offerings to their customers without investing in a network infrastructure.”

MTN has long been rumoured to have been interested in the MVNO market, and former group CEO Phuthuma Nhleko had even hinted previously that the operator was working with a local financial services company — believed at the time to be Standard Bank — though the company has to date not launched a single MVNO on its network.

Standard Bank Mobile CEO Steve Bailey — who previously ran Virgin Mobile in South Africa as well as MVNO “enablement” firm MVN-X — told TechCentral on Wednesday that the bank received “varying levels of interest” from the mobile operators in making their networks available, but that Cell C was “most ready from a technical point of view”.

Bailey said the bank remains open to other network providers in future, especially as it adds other services and expands its MVNO offering to other markets in Africa. Bailey said the bank engaged with all South African operators prior to launch.  — © 2018 NewsCentral Media