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    Home » Opinion » De Wet Bisschoff » Time right for MVNO lift-off in Africa

    Time right for MVNO lift-off in Africa

    By De Wet Bisschoff26 February 2016
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    de-wet-bisschoff-180All eyes are turned towards Barcelona this week, where Mobile World Congress 2016 is taking place. One of the main topics on the agenda, one which African telecommunications operators should pay close attention to, is what’s happening with mobile virtual network operators.

    MVNOs are wireless communications service providers that do not own the network infrastructure through which they provide services. Like Internet service providers, MVNOs buy bulk access to infrastructure from network operators.

    While MVNOs are common in other global markets, their growth has been sluggish at best in sub-Saharan Africa. However, this is all set to change thanks to the rise of the multi-Sim user.

    Dual-Sim phones are opening up the field for MVNOs to offer their own services, without requiring customers to switch from their existing providers. They have the potential to be disruptive in the telecommunications space, as customers can for the first time access two competing networks at once, without having to own more than one phone.

    A bustling market

    Dual-SIM devices offer a number of benefits that make them attractive to African users. They tend to be low cost, durable and functional. In addition, they allow for users to switch between Internet bundles from different service providers.

    The attraction of MVNOs is that they are able to offer wholesale prices for specialised services. Instead of needing to cover the entire range of telecoms services, they can focus on just one or two. Dual-Sim users are easily able to make use of these services, while still retaining a network operator as their main service provider.

    As many network operators see their subscriber growth slow, they are beginning to explore partnerships with MVNOs, banks and retailers. We can already begin to see the seeds of these partnerships being sown in the two African nations where MVNO activity has been highest, namely Kenya and South Africa.

    The power of the Sim

    Sales of dual-Sim devices have been on the rise in Africa for a number of years now, driven largely by the high cost of cross-network calls. Users who own multiple Sims can switch between networks as a cost-saving measure.

    Unsurprisingly, the African mobile money market — one of the most advanced in the world — has been quick to take advantage of the possibilities of dual-Sim devices. Kenya’s Equity Bank launched a paper-thin Sim card last year that latches onto an existing SIM, giving access to the bank’s mobile money service. This effectively lets users switch between their main network provider and Equity Bank’s specialised data offerings.

    Traditionally, African MVNOs have struggled to carve out a niche for themselves against infrastructure-owning operators, who dominate the market share for voice services. Africa’s need for data services could level the playing field, as MVNOs can focus on offering Internet bundles, retail apps and other digital services. No longer will they need to take on mobile network operators at their own game.

    Opening the field

    South African MVNOs face the same problem as their Kenyan counterparts: high termination rates that can prevent them from offering competitive voice calling costs across networks. They are set to get a major boost as new regulations from Icasa will see a decrease in termination rates. This should greatly facilitate the entrance of new players into the market.

    Pick and choose
    Pick and choose

    Faced with the loss of a major competitive advantage over MVNOs, this could drive operators to start selling more of their networks to resellers. Cell C has recently made great strides in opening up its infrastructure to wholesale partners.

    The other major opportunity for network operators is to start offering dual-Sim smartphones as part of their packages. We are already seeing signs of this happening, with MTN having launched its first dual-Sim device at the end of last year.

    Currently, the dual-Sim market is not as established in South Africa as it is in the rest of Africa, but we are seeing definite signs of growth. According to International Data Corp, dual-Sim devices make up 34,6% of smartphones in South Africa. For operators, it’s the perfect time to take advantage and recognise that MVNOs and dual-Sim phones make perfect bedfellows.

    Hand in hand

    What do the activities in Kenya and South Africa tell us about the prospects of MVNOs in the rest of Africa? The closer one looks at the relationship between MVNOs and multi-Sim users, the more obvious it becomes that it’s symbiotic.

    Dual-Sim growth will drive innovation from MVNOs, and the services they offer will lead to more people seeking out multiple Sims. Over the next few years, we should see a market where MVNOs actually bolster the use of dual-Sim devices, and vice versa, by offering affordable data packages.

    • De Wett Bisschoff is MD of Accenture Communications, Media and Technology for sub-Saharan Africa
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