Upswing in Capitec MVNO as SIM registrations grow

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 28 Sept 2023
Capitec Connect offers data bundles at R45 for 1GB.
Capitec Connect offers data bundles at R45 for 1GB.

Capitec Connect, Capitec Bank’s mobile virtual network operator (MVNO) service, has seen accelerated growth in subscriptions and improved usage since inception, it says.

Last September, the bank introduced the prepaid offering for voice, data and SMS, provided through a partnership with Cell C.

According to Capitec’s unaudited financial results for the six months ended 31 August, Capitec Connect has issued over 1.3 million SIM cards since launch.

During the period, the bank says it grew its non-interest income streams through product diversification and digitalisation, insurance licensing and broadening payment services.

The bank’s net transaction and commission income grew 24% to R6.9 billion. Headline earnings grew 20% to R242 million, with its strong performance attributable to growth in active business clients.

Capitec Connect continues to sign up new users, as customers embrace its value proposition of offering low data prices with no expiry date, it says.

“Capitec Connect’s active user base and revenue per user improves month-on-month. We offer the lowest rates for data bundles at R45 for 1GB, and no expiry. Capitec also launched a 10GB bundle at R199, half the price of the prevailing market price. Future additional products will be based on client needs and better behavioural data,” says the bank.

It adds it has continued to innovate Capitec Connect through improved network coverage with Cell C, which has been migrated to the MTN network.

In terms of online banking channels, Capitec says the number of clients embracing digital transactions (web, app and USSD) has grown 8% to 11.7 million, with the number of app users alone climbing to 10.2 million, making Capitec the biggest digital bank in SA.

Gerrie Fourie, CEO of Capitec Bank, comments: “In an economic climate rife with financial challenges, Capitec's latest results highlight our commitment to product diversification, underpinned by our investment and innovation to meet our clients’ dynamic needs.

“Our ongoing investment in innovation and active client growth resulted in an 18% increase in retail transaction volumes. This surge has propelled digital transaction volumes by 21% to 957 million, with the banking app claiming 83% of these transactions (volume). Income from ‘send cash’ payments and voucher sales soared 56% to R1.1 billion.”

Capitec says August saw a record number of 4 501 new accounts opened – 40% of accounts were opened either via the mobile app or online, in an estimated average time of 30 minutes.

Capitec Pay, a service that makes online payments safer for clients and retailers, has processed 52 million transactions since it was introduced in March, it says.

The PayShap solution, which launched in August, has already captured a 43% market share.

“Capitec has expanded its value-added services (VAS) offerings to now encompass bill payments, vouchers and national lottery ticket purchases. VAS now constitutes 16% of Capitec’s net transaction and commission income, generating R394 million,” it says.