South Africa’s banking MVNOs were conceived as a defensive weapon. Banks watched mobile operators build payments platforms, accumulate transaction data and push into financial services from the connectivity side. The mobile virtual network operator was the answer: own the mobile relationship, generate behavioural data between transactions and build switching costs that make the customer harder to lose. Capitec Connect’s R442-million net income in a single year suggests the weapon works.

But weapons are designed for specific battlegrounds. The convergence war has moved, and the battlefield the banking MVNO was built for – voice, airtime, the phone number as the anchor of the customer relationship – is no longer where the decisive contest is being fought. The operators have shifted to data. And on data, they hold structural advantages no MVNO can replicate from its current position.

The traffic numbers make the shift concrete. MTN’s data traffic rose 29.1% in the first half of 2025 against the same period a year earlier. Vodacom’s South African data traffic grew 36.4% in its 2025 financial year. Meanwhile, over-the-top services – WhatsApp calls, streaming, messaging – have continued to erode traditional voice and SMS revenues across the market. The phone number is still the anchor of the customer relationship. But the data connection is where the relationship now lives.

Capitec Connect carried 768 million voice minutes in the year to February 2026. Those minutes are now free to make – the on-net proposition that has locked 1.5 million subscribers more firmly onto Cell C than any contract clause could. That trap was examined here. What that piece did not examine is what happens when the battleground is data rather than voice, and when the operators competing for the same customer arrive with structural advantages the MVNO cannot match.

The scale of what’s coming

Across Africa, Vodacom and MTN have proven the model works at scale. Vodacom’s fintech business surpassed 103 million active financial services users in the year ended March 2026, growing 17.4% year on year. MTN’s MoMo platform processed more than US$500-billion in transaction value in 2025, up 37.6%, with 69.5 million active users. Combined, the two operators now process over $1-trillion/year in mobile money transactions across the continent – proof of concept at a scale no banking MVNO can match.

In South Africa, the investment is deliberate and accelerating. M-Pesa in Kenya and MoMo in Ghana and Uganda dominate the pan-African volumes, but both operators have stated that financial services will account for a larger share of group revenue by 2030, and their South African moves are explicit – as the MTN MoMo Mastercard partnership in October 2025 and VodaPay’s continued expansion demonstrate. The question for South African banks is not whether the operators are serious. Rather, it is whether the MVNO, as currently structured, is adequate to defend against what is being built here.

The weapon the banks don’t have

Every South African banking app – Capitec, FNB, Standard Bank, Nedbank – is zero-rated for the customer. You open the app, you bank, you pay no data. That is not in dispute. What is in dispute is who absorbs the cost.

VodaPay is available to customers on any network – Vodacom has cast the widest possible net for financial services customers, regardless of who carries their mobile traffic. But it is zero-rated only for Vodacom subscribers. When Vodacom absorbs that data cost, it is an internal accounting entry – wooden dollars that never leave the group as an external payment. When a banking MVNO zero-rates its app, it pays the host operator for every megabyte its customers consume under the terms of its hosting agreement. The customer sees nothing. The bank absorbs a real cost – on infrastructure it does not own, paid to a competitor that is building a rival financial services platform on the same network.

Standard Bank Connect sits on MTN. Nedbank Connect sits on MTN. Both pay MTN to carry their mobile traffic. In October 2025, MTN MoMo South Africa deepened its Mastercard partnership specifically to broaden digital financial services access in the South African market – new payment features, broader reach, the same infrastructure the banks are renting. MTN is not waiting for wholesale renewal negotiations to press its advantage in financial services.

MTN is simultaneously a wholesale infrastructure provider to two of South Africa’s banking MVNOs and an active competitor for the same customers’ financial services wallet. Those two roles are not in conflict from MTN’s perspective; they are complementary. The MVNO fees fund the network. The network carries the traffic. The network-level data pricing advantage belongs to MTN, not to the banks riding on top of it.

The strategic case for the banking MVNO remains sound within limits. It delivers a branded phone number, a billing relationship, airtime and data revenue, plus the behavioural data generated between banking transactions. That last element is especially valuable – a bank that knows when its customer buys groceries, fills a tank or pays school fees has a richer picture of financial behaviour than one that sees only the month-end transaction.

The banks are not unaware of the shift. The behavioural data argument is a genuine strategic asset, and the smarter strategists inside these banks know it. But behavioural data is valuable only if the customer stays. And the customer stays on a network whose operator is under no obligation to make that customer’s banking app as cost-efficient to run as its own. The banks have identified the right asset. They are defending it with tools that belong to someone else.

The deeper irony

The banking MVNO was launched to defend against operators pushing into financial services. The defence was built on infrastructure owned by those operators. The most successful defensive features have made that dependency more entrenched, not less. And the operators have used the intervening years to build financial services platforms at a scale, and with a data architecture, the MVNO position cannot match.

Read: The trap inside South Africa’s banking MVNO boom

South African banks held R6.1-trillion in depositors’ funds as of April 2025. The operators are not about to displace that. But displacement is not the threat – erosion is. Standard Bank has reduced its branch footprint by 42% since 2017; Absa, FNB and Nedbank have collectively closed thousands of ATMs over the same period, accelerating the migration of customers to digital channels. Capitec has taken the opposite approach, expanding both branches and ATMs to reach underserved communities – the same low-income, first-time financial services customer that MoMo and VodaPay are pursuing from the connectivity side. The contest is at the margin, and that is where the operators’ structural advantages are most pronounced.

The operators arrive with continental scale, a proven model and the ability to absorb their own app data costs as an internal transfer. The banks carry the same cost as an invoice payable to a competitor.

The phone number was never the prize. It was always the door. The question now is who controls what’s behind it.

The author, Pambos Soteriades, is a telecoms and strategy consultant with 28 years’ experience in African mobile markets, including executive roles at Vodacom Group and Telkom Kenya. He has worked in the South African MVNO market on both the operator and MVNO side. He is not affiliated with, employed by or invested in any institution, operator or MVNO mentioned in this article
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