MTN and Vodacom are structurally constrained from competing hard for mobile virtual network operator hosting business, Cell C CEO Jorge Mendes has argued, because at their market shares an aggressive wholesale push would cost them retail customers to their own wholesale clients.

“If I had an 80% market share, I would not be going into the MVNO space in any aggressive way,” Mendes said, “assuming that my retail business has got healthy margin and I’m structured for that.”

The constraint is not permanent, he said, but it is slow to fix. An operator would have to restructure so that the contribution margin on wholesale is similar to the margin on retail. Mendes put that at a multi-year exercise – “short term is probably two to three years, depending at the pace at which they can go” – and said whoever completes it will determine who has the appetite for the business.

Asked directly whether Cell C’s retail and wholesale margins are already comparable, Mendes said they are.

That is the answer to the obvious question of why the third operator can pursue a strategy the first two cannot. Cell C runs on MTN and Vodacom infrastructure rather than its own radio access network, so it carries none of the retail base that would be cannibalised. Its wholesale division grew revenue 20% to R1.76-billion in the year to 31 May 2026, adding 1.2 million MVNO subscribers to reach 5.71 million lines, and the company reckons it hosts 80-85% of the South African MVNO market.

The rivals are coming anyway

MTN has said it wants to be South Africa’s leading MVNO wholesaler, and Vodacom has entered the hosting market. Mendes is unimpressed by the latter. He said Vodacom has done nothing beyond signalling an intention, and that there is nothing sitting in its MVNO space.

Pressed on Mr Price, he conceded the point but said the arrangement predates any strategy shift and is being classified as wholesale MVNO despite having been in place for years. Cell C hosts Mr Price, too, under what Mendes described as a dual-vendor arrangement.

Read: MVNOs are doing the heavy lifting at Cell C

He was less dismissive of MTN, which he said has hosted wholesale customers for some time. He pointed to Standard Bank, which moved to MTN with its own platform, while the legacy subscriber base stayed with Cell C through MVNX.

On whether anything structurally prevents MTN from undercutting Cell C on wholesale prices, Mendes was careful. Competition rules on margin squeeze and abuse of dominance apply, and Cell C is by a distance the largest buyer of wholesale traffic in the country. Selling a fraction of that volume at significantly lower prices would raise a margin squeeze question. On a like-for-like basis, he said, there is nothing stopping them, and competition is welcome.

MTN has already conceded part of Mendes’s premise. Presenting at MTN Group’s capital markets day in June, MTN South Africa CEO Ferdi Moolman said he has no interest in empowering an MVNO sitting “slap-bang within an area where MTN already has market share”, and some players, he warned, now treat telecoms as a loss leader in a way that risks “value destruction”.

MTN is also overhauling how it prices wholesale access, moving to a four-pillar framework covering price, capacity, quality and – for the first time – the market segment a partner serves. “If you want high quality, you need to pay a premium price,” Moolman said.

That is not a retreat from MVNO hosting. It is a narrower version of it than Mendes was asked about, and one built around the same conflict he describes: host where it grows the base, decline where it eats it.

Mendes’s argument is not new. The Competition Commission’s 2019 data services market inquiry found an inherent conflict of interest between mobile network operators and the MVNOs they host, concluded that operators are consequently slow to take them on, and said legislation was the only way MVNOs would survive. Most of South Africa’s early MVNOs, Virgin Mobile among them, went under.

Communications regulator Icasa attached MVNO hosting obligations to the spectrum sold in the 2022 auction. The Electronic Communications Amendment Bill goes further, obliging any operator covering at least 90% of the population – in practice Vodacom and MTN – to provide MVNO services on request, with Icasa to prescribe wholesale pricing rules. Written submissions close next month, after a one-month extension to the original deadline.