Melon Mobile, the mobile virtual network operator (MVNO) launched in April on MTN South Africa’s network, has introduced embedded Sim (eSim) support to its offering.

TechCentral spoke to Melon founder and CEO Calvin Collett to discuss the significance of eSim support to the company, which is one of the first MVNOs in South Africa to launch an eSim offering.

“eSim is really the enabler for what we’ve built for. You will have seen that other networks have launched eSims but you still need to go in store, so the benefit of an eSim is then negated. We believe that eSims were designed to be on an app and downloaded,” Collett said.

eSims provide customers with the option to browse and potentially keep multiple subscriber accounts with various telecoms operators on one device. Once an eSim is loaded, users can switch between accounts for various use cases such as voice or data consumption. The ability to browse an operator’s offering without having to commit immediately, said Collet, is crucial to Melon’s growth strategy as a new entrant in the market.

“There is a lot of friction around being locked in and having to cancel a contract. eSim allows customers to test the Melon network because they keep whatever Sim they have in the physical slot and just add Melon as a secondary provider. Then they can just use us for data – that is our recommendation and big win here because our data prices are cheaper and our data does not expire,” said Collett.

According to Collett, a user with an eSim-enabled device can be “up and running on the Melon network within five minutes”. He hopes the added convenience, which includes the Rica process, will drive adoption rates and improve Melon’s average revenue per user (Arpu, a key industry performance metric). Melon’s Arpu rates are relatively low, Collett explained, because the MVNO’s subscriber base is dominated by prepaid users. Melon’s Arpu is also affected by the “testing phase”, when a user is still exploring and is undecided about the offering.

Melon Mobile eSims

“What we’re seeing is that guys are coming to us as a second or third Sim, which is typical for a new entrant, so they are testing us, but once they trust us and port across, we then get the Arpu that we expected,” said Collett.

Collett cautioned that eSims won’t replace physical Sim cards anytime soon. “As much as eSim is a big enabler for us, I don’t want to negate the fact that physical Sims are going to be around for a long time. It’s not that eSim is going to be our silver bullet. We do believe, however, that it is going to drive a lot of adoption, especially for high-volume data users,” said Collett.

Being virtual, MVNOs do not own any physical infrastructure and rely on network operators for support. Melon runs its services on MTN, where Collett was head of the telecoms operator’s Supersonic internet service provider business for four years before leaving to start Melon last year.

Communications regulator Icasa required telecoms network operators such as Vodacom and MTN to launch MVNO “enablement” platforms as a condition of securing spectrum at 2022’s spectrum auction. “It definitely is MVNO season,” Collett told the TechCentral Show in April. With competition rife in the MVNO space, Collett believes that a compelling unique value proposition is critical to making headway in the fledgling market.

“My view is if you want to win in this space, you have to offer something new and interesting. Melon is coming in as a full-on mobile player as opposed to a rewards programme. We are trying to figure out how to change the way that mobile is done to the customer’s benefit. We are coming in with a disruptive mindset versus giving a few gigs back to our customers and otherwise providing the same old service,” said Collett.

Part of the “compelling value proposition” Melon offers includes competitive pricing on data, voice and SMS bundles. Using a hybrid prepaid and post-paid model, users can curate their subscriptions as if they are on contract while retaining the flexibility to change pricing plans via the Melon app up to a day before their debit order deduction is due.

Read: eSims: a threat to mobile operators?

Although Melon’s digital-only approach facilitates more “fluid” customer journeys (that are also cheaper to service for the young MVNO), a completely digital approach does present its own set of challenges. Low smartphone penetration rates in the lower segments of the market is chief among them.

“We’ve included WhatsApp functionality so that low-end customers can interact with us,” said Collett. “Through WhatsApp, we’ve tried to make the product digital irrespective of the type of phone you have or what your spending patterns are.” – © 2023 NewsCentral Media