The MVNO – or mobile virtual network operator – market in South Africa is growing, but the introduction of some “light-touch” regulations, including defining what an MVNO is, could bolster growth for the sector.
This is according to Andre Wills, MD at Africa Analysis, who was speaking at the launch of South Africa’s newest MVNO, C-Connect, in Johannesburg on Tuesday.
“MVNOs offer regulators the opportunity to allow new entrants into the mobile market at low cost since they don’t have to bid for spectrum. But there is no licensing framework for MVNOs in South Africa, so they have a commercial standing but no legal standing,” said Wills.
He said South Africa’s MVNO market is relatively healthy. Africa Analysis data shows a total of 34 MVNOs have been launched in South Africa since the first one, Virgin Mobile, went live on Cell C’s network in 2006. Eighteen of the 34 are still in existence.
According to Wills, the spectrum licensing conditions imposed by communications regulator Icasa on tier-1 operators such as Vodacom, MTN, Telkom, Cell C, Liquid Intelligent Technologies and Rain, which mandated that these operators support MVNOs on their networks, has been a driver of growth for the sector. Despite this, Vodacom, Telkom, Liquid and Rain are yet to host any MVNOs.
The approximate one in two survival rate of South African MVNOs does not compare well to the average 71% success rate internationally. The most successful MVNO markets have some kind of licensing framework supporting the sector, said Wills.
Regulatory support
“When you look at other countries, you see a raft of regulatory support for MVNOs, whereas there isn’t any specific regulation for MVNOs in South Africa. And we don’t need a lot of it, but the advantage of a licence is that it defines your rights and obligations, and it gives you a legal standing if you ever have a dispute. The problem we have as a country is we haven’t defined what an MVNO is and we are going to see a lot of pressure and pain at Icasa over MVNOs,” he predicted.
Cell C stands out among South Africa’s network operators for its choosing to support MVNOs as part of its growth strategy, rather than as an attempt to meet regulatory requirements. As a consequence, a significant portion of the active users on Cell C’s network are there through the various MVNOs which the operator supports. Wills said this is not unusual, with comparative data from Europe showing successful operators with more than 30% of their traffic driven by MVNO customers.
C-Connect has also chosen Cell C as its infrastructure partner.
At the launch, the company’s chief operating officer, Richard Anderson, said the choice to partner with Cell C as its infrastructure partner is because of the mobile operator’s commitment to growing its MVNO base. C-Connect also partners with Cell C parent Blue Label Telecoms for distribution, technology and the provision of value-added services via its customer-facing channels.
Wills said one of the key differentiators MVNOs offer over network operators is a personalised product offering as well as a focus on niche markets and bundled services. Africa Analysis data shows that about a third MVNOs focus on the budget segment.
Other successful niches not seen in South Africa are MVNOs offering machine-to-machine communication and those that only focus on business clients. “What we haven’t seen in South Africa yet is a purely business-focused MVNO. Some big IT customers have tossed around some business plans but we haven’t seen one launch.”
According to Anderson, C-Connect is also aiming for the value-conscious consumer. Its commercial offering includes a 240-minute voice bundle for R99, a 1GB non-expiring data bundle for R85 and a 30-day 1GB WhatsApp bundle for R35.
The company also offers a cashback incentive of 10% on all spending in the form of platform-specific tokens, called Cha-Ching, which can be used to purchase airtime, electricity and other value-added services.
Some of the most successful MVNOs in South Africa were able to take advantage of an existing retail customer base gain traction. These include the likes of MRP Mobile, Standard Bank Connect and Pick n Pay Mobile.
“We don’t have that existing base; the successful MVNOs in South Africa have had that. So, we need to be clever with our marketing and how we engage our customers,” said Anderson. – © 2024 NewsCentral Media
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