Mobile virtual network operators (MVNOs) are telecommunications service providers that piggyback off the infrastructure of larger, more established mobile network operators to provide services to niche consumer segments.

The history of MVNOs in South Africa dates back to 2006 when Cell C became the country’s first network operator to carry an MVNO on its network. Cell C launched Virgin Mobile South Africa in partnership with Richard Branson’s Virgin Group.

Unfortunately, Virgin Mobile stopped servicing its customers in September 2021 when Cell C terminated its services to the MVNO, which had changed shareholders and fallen on hard times. After 15 years of operations, the local telecoms market proved too tough for the pioneering MVNO to navigate.

In the intervening years, however, the MVNO sector has grown significantly, with brands across consumer-facing industries – from telecoms to banking and insurance to retail – launching their own mobile offerings.

TechCentral has put together a list of the most prominent MVNOs in the South African market. The list, while meant to be comprehensive, may exclude some of the smaller MVNOs, with some network operators reluctant to share the names of their clients.

MVNOs in South Africa

Most of the MVNOs in South Africa run on Cell C’s network infrastructure. In fact, only three of these, Pick n Pay Mobile, TFG Connect and Melon Mobile, use MTN. FNB Connect runs on both Cell C and MTN. Vodacom, Rain and Telkom Mobile do not carry any MVNOs on their networks – yet.

MVNOs can either connect directly to a network’s infrastructure or go via an independent enablement platform. Enablement platforms specialise in acting as an interface between the MVNO and the network operators.

Founded in 2012, MVN-X is a network agnostic mobile virtual network enablement (MVNE) platform that helps businesses integrate their MVNO into existing network infrastructure on the technical front and execute their MVNO strategy on the retail side.

Market development

According MVN-X CEO Valde Ferradaz, Cell C’s late entry into South Africa’s mobile telecoms market is the major reason why MVNO enablement became a strategic imperative for the operator.

“When Cell C entered the sector, the market was already dominated by Vodacom and MTN. Cell C’s decision to play in the wholesale arena early on helped it to tap into new distribution channels and niche markets. MVNOs are a great way for mobile operators to penetrate niche segments by using the brand affinity and consumer relationships that their partners have with their customers,” Ferradaz told TechCentral in a phone interview on Thursday.

Cell C was the only network to offer a platform for MVNOs and remained so until 2020 when MVN-X integrated Pick n Pay Mobile and Boxercom into the MTN network. Since then, the market has seen accelerated growth in MVNOs.

Read: FNB signs MTN as second MVNO partner

“Capitec, TFG, Mr Price Mobile, Pick n Pay and Boxer all entered the market in the last three to four years. In the last two years, we have seen a huge increase in the number of enquiries from large institutions and the market is poised for further growth,” said MVN-X chief commercial officer Daniel Swart.

Achieving success in the MVNO space is no easy feat. According to Swart, there are two types of MVNOs: pure telecoms plays like Melon Mobile and branded MVNOs such as TFG Connect and Capitec Connect. The latter use their brand power to tap into their existing customer base and offer mobile communications services as a value-add. These companies, Swart said, tend to be more successful than the telecoms MVNOs, even though having a captive customer base does not serve a guarantee of success.

“MVNOs need to gear themselves up to retain their customers. It’s a different space, so they must understand the market is competitive and customers behave differently to whatever their core business may be. However, the historical data that they have on their customers is a huge asset and can be used to offer added-value at the right time,” he said.

One the advantages that MVNOs bring to the marketplace is a diversification of retail products, expansion of consumer choice, improved competition between operators and greater value for consumers.

But MVNOs cannot grow if network operators don’t play ball, and historically, the larger operators have been reluctant to support MVNOs on their networks. As a result, communications regulator Icasa mandated “MVNO enablement” as part of its licensing agreement with mobile operators in the 2022 spectrum auction in an effort to support the expansion of the market.

Read: Telkom expects first MVNO on its network this year

Under the auction rules, operators that received spectrum in the 700MHz and 800MHz frequency bands have up to three years to build a platform and to host the launch of three MVNOs each. So far, Vodacom, Telkom and Rain – all of which were recipients of such spectrum – have not yet launched the required number of MVNOs, and in fact Vodacom, Telkom and Rain don’t yet have any MVNOs. – © 2024 NewsCentral Media

AI-generated summary of this article

The article discusses the current state and future prospects of mobile virtual network operators (MVNOs) in South Africa.
MVNOs are service providers that use the network infrastructure of mobile network operators to offer mobile services to customers.
MVNOs face various challenges and opportunities in the South African market, such as regulatory barriers, spectrum allocation, customer segmentation, value proposition and innovation.