Cell C was South Africa’s first mobile operator to host a mobile virtual network operator (MVNO) on its infrastructure. Today they have become key to its growth strategy.
Cell C CEO Jorge Mendes, who has been in the role for just over a year, has told the TechCentral Show in an interview that expanding the number of MVNOs it hosts is key its turnaround plan.
“A lot of MVNOs have come and go and didn’t make it… We need to make sure that we enable our MVNO partners with all the right ingredients: CVM (customer value management) capability, pricing, reporting and know-how, so they align [with us] on how to extract value by marrying the behaviours of both entities.
“This is no longer a game of, ‘Here are some wholesale prices, go do your thing and if you succeed, great.’ We want to make sure that we partner deeply and properly,” Mendes said.
He said the success of MVNOs is predicated on how well the businesses integrate their mobile offerings into everything else they do, and not purely a function of how much they offer in discounts on voice and data products.
Mendes predicted that given the opportunity for MVNOs in sectors such as retail and banking, companies in these sectors could, in time, begin to compete more directly with traditional operators. For example, Capitec Connect now has an airtime advance product, something only the big operators provided in the past. FNB Connect, on the other hand, has a competitive edge when it comes to handset financing and competes up there with traditional operators, he said.
Disrupting the market
“We’re seeing 20% revenue growth in that space, and 76% traffic growth. We have repriced and restructured [our MVNO offering], and that’s going to accelerate to over 100% traffic growth and they will monetise it. I think there is a lot of headroom and runway in the MVNO business.”
Mendes said MVNOs have the potential to disrupt the market. In Europe, some network operators were hounded out of the market by innovative MVNOs. Cell C is “very deliberately” going after the MVNO market because the company has “much more to gain than to lose”.
Mendes said Cell C is also looking at the enterprise (business) MVNO space, too. Organisations with a large numbers of staff are seen as a big opportunity for enterprise-focused MVNOs.
Read: Listed: all the MVNOs in South Africa – H2 2024 edition
Key to the success of Cell C’s MVNO strategy is the decision by the company to relinquish its network infrastructure assets and effectively “roam”, using its own spectrum, on MTN and Vodacom. The move has had the impact of dramatically lowering Cell C’s capital expenditure, allowing it to focus on customer service and other areas that give it advantage over its rivals.
“This [roaming] model is a good one because it creates revenue for the other players (MTN and Vodacom), it creates a competing position for us in terms of quality of network, and that then allows real competition to flourish in the market,” said Mendes. – © 2024 NewsCentral Media
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