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FNB Connect awaits stability at Cell C to scale

Read time 4min 40sec
FNB CEO Jacques Celliers.
FNB CEO Jacques Celliers.

First National Bank (FNB) is awaiting stability at financially-constrained mobile operator Cell C before it can fully scale its FNB Connect mobile network.

So said Jacques Celliers, CEO of FNB, in a telephonic interview with ITWeb this week, after the bank announced its financial results for the six months to December 2019.

FNB Connect launched as a mobile virtual network operator (MVNO) in June 2015, making FNB the first bank in the country to establish a mobile offering.

Standard Bank officially launched its own MVNO, called SB Mobile, in November 2018.

FNB Connect is an MVNO available to FNB customers and allows them to choose between a range of contract and prepaid packages.

It piggybacks on Cell C’s network.

In November last year, Cell C and MTN announced an extended roaming agreement that helps the country’s third-largest operator broaden its 4G network coverage nationally.

Cell C said the deal would extend 4G coverage to 95% of the population and its customers will now have access to over 12 500 sites, of which 90% are LTE-enabled.

Thanks to this deal, FNB Connect subscribers can also get more network coverage.

The other MNVOs that ride on the Cell C network include SB Mobile, Virgin Mobile SA, Mr Price Mobile, Trace Mobile and me&you Mobile.

Distressed operator

However, all is not well at Cell C. Blue Label is the largest shareholder in mobile operator Cell C, with a 45% stake.

During the previous financial year, the operator’s loss stood at R8 billion. Blue Label was forced to write down its investment in Cell C to nil.

Cell C has been under pressure for some time, facing myriad problems, including job stoppages, declining revenue and debt management challenges.

The distressed mobile operator will announce its financial results on 23 March.

Asked about the progress FNB Connect is making since launch, Celliers said: “When we start new things, we always give it a bit of time to get the basics under control because once we start integrating it into our banking proposition, we don’t want to cause relationship issues because of the new product.”

According to Celliers, telecommunications is one of those emotional sectors. “The same way, if your car doesn’t work, people get emotional; if your phone doesn’t work, it’s also very emotional. So we like these meaningful value propositions.”

He pointed out the bank is investing heavily in FNB Connect, which has two drivers at the moment.

“The first driver it does for us is that it resells other network products, and we have been doing that for a long time so that is not a new strategy. When you log onto your app and top-up, for example, with Vodacom airtime, we use the Connect platform to facilitate that.

“The second aspect is it allows us our own telecommunication licensed SIM cards which allows us to operate as an MNVO on Cell C’s network.”

He pointed out the drive now is to integrate the FNB Connect value proposition into the bank account so that every time someone opens a bank account, they get a bank account with the SIM card.

“We have done some successful activities around that last year and we are starting to learn the business model to make sure we get it right before we scale it too much to become something that we can’t afford.

“At the moment, it’s going on very well and we are very proud of our Connect value proposition,” said Celliers.

Next phase of growth

“We are, however, waiting for more messaging around the stability of Cell C as a business and we are supporting them. It seems they have some plans and we look forward to them getting past that stage so that we can both grow into the next phase of our growth.

“I know they are working very hard and we enjoy our relationship with them a lot.”

On the nature of the support FNB is giving to Cell C, he said: “One way is we are keeping our volumes at Cell C and it helps them to justify themselves as a big business when they do their own capitalisation and business planning.

“At the moment, our volume is probably the biggest contributor to how we are trying to help them. We have given them some time before we can make any decision on other things. We hope they get through this phase and that they can come back in the market stronger. We know that businesses go through phases and our job is to try and help them.”

In its results, FNB says over the period, digital logins were up 14% and logins across all digital interfaces reached a record high 120.1 million in December 2019.

Financial transactions on the FNB App continued to grow by 37% for the period, with increased uptake of money management functionality via our app and other digital platforms.

It notes that inclusive banking products like eWallet are showing strong growth, with all metrics up strongly with over 26 million sends seen over the period.

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