Grace Ashiru
The MVNO (Mobile Virtual Network Operator) market in South Africa is expanding, and the introduction of some “light-touch” regulations, including a clear definition of what an MVNO is, could further stimulate growth in this sector.
This perspective was shared by Andre Wills, the Managing Director at Africa Analysis, during the launch of South Africa’s latest MVNO, C-Connect, in Johannesburg on Tuesday.
“MVNOs provide regulators with the opportunity to introduce new players into the mobile market at a low cost, as they don’t need to bid for spectrum. However, in South Africa, there is no licensing framework for MVNOs, meaning they have commercial standing but lack legal recognition,” said Wills.
He mentioned that South Africa’s MVNO market is in relatively good shape. Data from Africa Analysis reveals that a total of 34 MVNOs have been launched in the country since the first one, Virgin Mobile, went live on Cell C’s network in 2006. Out of these, 18 are still operational.
Wills pointed out that the growth in this sector has been driven by the spectrum licensing conditions set by the communications regulator Icasa, which required tier-1 operators like Vodacom, MTN, Telkom, Cell C, Liquid Intelligent Technologies, and Rain to support MVNOs on their networks. However, despite these conditions, Vodacom, Telkom, Liquid, and Rain have yet to host any MVNOs.
The approximate survival rate of one in two for South African MVNOs is not as favorable compared to the international average success rate of 71%. Wills noted that the most successful MVNO markets typically have some form of licensing framework in place to support the sector.
When you look at other countries, you’ll notice a range of regulatory frameworks supporting MVNOs, but in South Africa, there isn’t any specific regulation for MVNOs. While we don’t need extensive regulation, having a licence is beneficial as it clearly defines your rights and obligations, providing legal standing in case of disputes. The issue we face as a country is that we haven’t clearly defined what an MVNO is, which could lead to significant challenges and disputes at Icasa over MVNOs.
Cell C distinguishes itself among South Africa’s network operators by embracing MVNOs as a core part of its growth strategy, rather than just complying with regulatory requirements. As a result, a substantial portion of active users on Cell C’s network are there through the various MVNOs it supports. This approach is not uncommon, with European data showing successful operators having more than 30% of their traffic driven by MVNO customers. C-Connect has also selected Cell C as its infrastructure partner.
At the launch, Richard Anderson, the company’s chief operating officer, highlighted the decision to partner with Cell C as its infrastructure partner, citing the mobile operator’s dedication to expanding its MVNO base. C-Connect has also teamed up with Cell C’s parent company, Blue Label Telecoms, for distribution, technology, and the provision of value-added services through its customer-facing channels.
Wills noted that one of the main advantages MVNOs offer over traditional network operators is the ability to provide personalized product offerings and cater to niche markets with bundled services. Data from Africa Analysis reveals that around one-third of MVNOs focus on the budget segment.
In South Africa, certain successful niches, such as MVNOs specializing in machine-to-machine communication or those exclusively targeting business clients, have yet to emerge. “We haven’t seen a purely business-focused MVNO in South Africa yet,” Wills remarked. “While some major IT customers have considered business plans, none have launched so far.”
Anderson also mentioned that C-Connect is targeting value-conscious consumers. Their commercial offerings include a 240-minute voice bundle for R99, a 1GB non-expiring data bundle for R85, and a 30-day 1GB WhatsApp bundle for R35.
The company also provides a 10% cashback incentive on all expenditures, which is rewarded in platform-specific tokens known as Cha-Ching. These tokens can be redeemed for airtime, electricity, and other value-added services.
Several of the most successful MVNOs in South Africa have leveraged an existing retail customer base to gain traction, including MRP Mobile, Standard Bank Connect, and Pick n Pay Mobile.
“We don’t have that existing base; the successful MVNOs in South Africa have had that. So, we need to be clever with our marketing and how we engage our customers,” Anderson said.
