Cell C, South Africa’s fourth-biggest mobile network operator, is confident it will become the “home” of South Africa’s burgeoning mobile virtual network operator (MVNO) market.
This was the word from CEO Jorge Mendes yesterday, when he provided a business update to members of the media.
South Africa is witnessing a growing number of mobile virtual network enablement (MVNE) platforms. These help MVNOs to launch and manage their mobile services without having to build their own network infrastructure.
The country’s MVNO landscape is continuously growing, with new players offering competitive pricing and flexible plans, without the same level of investment required by traditional mobile network operators.
Banks, insurance firms and major retailers are driving competition in the sector by launching their MVNOs.
In March, Melon Mobile became the latest company to launch an MVNE platform, called Melon Digital, which allows businesses to offer mobile connectivity to their customers, under their own brand.
In the same month, Telkom joined the MVNO race through a partnership with an unnamed MVNE platform provider.
Earlier this year, JSE-listed Huge Group entered the MVNO space with its Huge NXTGN MVNE platform.
Cell C was the first operator to host MVNOs on its platform, before MTN and Vodacom launched their own platforms.
According to a recent report by market analyst firm BMIT, the local MVNO market will continue to outpace that of mobile operators for some time to come.
FNB Connect, Capitec Connect, PnP Mobile, Boxercom, Poket Mobile, Sakeng Mobile, K’nect Mobile, TFG Connect, Capitec Connect, Melon Mobile and Afrihost Mobile are some of the MVNO players in SA.
Through thick and thin
Cell C’s platform allows third-party brands to offer mobile services using the telco’s infrastructure, effectively enabling them to create their own mobile offerings without the need to build physical network infrastructure.
This move positions Cell C as a key enabler in the growing MVNO market, which is expected to drive competition, innovation and more affordable mobile solutions for South African consumers.
“Our MVNO partners need to have the confidence that they have a great reputable partner, which wasn’t the case before. In fact, we had a very big risk of having a poor-quality network,” said Mendes.
He noted that when he joined the company, some MVNO partners would ask if Cell C would still be financially viable within two years.
According to Mendes, during those turbulent days, some MVNOs had to mitigate their risks and partnered with other mobile network operators in case Cell C “would not be alive in future”.
“The MVNOs have to be comfortable with us because these partnerships directly impact their brands.
“Some of the conversations I had with some existing MVNO partners when I joined were not very nice – they were very threatening towards us. They would ask: ‘Where are you going financially? Where are you going on network quality? Are you going to be around in six months’ time?’ These were very difficult questions and we had to be brutally honest with them.
“We are not just onboarding MVNO partners for the sake of it. We want to make sure that when we partner, we do so with the intention of going together through thick and thin to make the partnership a success.”
Mendes noted that Cell C is deliberate and intentional about its MVNO business because it believes there is a massive opportunity in the market.
“The bigger players will not be that keen to go as aggressively in this direction because they’ve got large market shares that will be cannibalised if they go in this direction. In my view, they have got a defensive strategy – one of meeting some obligations as a regulatory requirement, whereas ours is intentional to go as far as we can in this business.”
The Independent Communications Authority of South Africa requires mobile network operators to support at least three black-owned MVNOs as part of their spectrum licence conditions issued in 2022.
“We believe that the banking and retail sectors will have the biggest success in the MVNO business, as opposed to MVNOs of the past. The past MVNOs were strong brands but they were not high utility complementary services; for example, Virgin Mobile, Trace Mobile and Red Bull,” Mendes said.
“They were very powerful brands but found it difficult in the MVNO space in regards to creating that level of leverage.”
Virtual move
Meanwhile, Cell C says its capital-light approach, a concerted focus on network improvement and technological innovation have yielded positive results by providing broader coverage (a leap from 5 500 base stations to 28 000) and enhanced mobile service for customers – enabling customers to experience faster, more reliable connectivity.
“The shift towards a virtualised network has allowed us to move faster, innovate smarter and focus on what truly matters – giving customers a reliable, quality connection when and where they need it,” says Cell C chief technology officer Schalk Visser.
“It’s not about who owns the towers. It’s about how well the network performs in the moments that matter to our users.”
“With strong year-on-year growth, improved liquidity and a clear strategy in motion, Cell C is repositioned for profitable, sustainable growth,” said Mendes.
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