Capitec’s mobile unit has grown its customers by a third in the past year, to 1.2-million, as the bank continues its push to grow revenue from the sale of digital products.
Capitec Connect is the bank’s mobile virtual network operator (MVNO) business.
MVNOs are usually nontelecom businesses — including FNB, Standard Bank Mobile, Mr Price Mobile and Pick n Pay — that lease network infrastructure from mobile operators to sell data and voice services to their own customers. Capitec uses Cell C’s network for its service.
SA’s largest retail bank by customers reported that its active Capitec Connect clients grew 30% to 1.2-million, increasing income from this source for the six months to end-August.
Net transaction and commission income, including value-added services (VAS) and Capitec Connect, was one of the main drivers of growth for the bank. Net transaction income and commission excluding VAS grew R1.1bn while growth in VAS contributed R833m to profit before tax.
Net income for the mobile business was R69m for the period.
By the end of its most recent financial year Capitec’s mobile unit had started contributing positively to the bank’s earnings.
Like its rivals, Capitec has been using its digital channels to push sales for products such as airtime, data and electricity, commonly referred to as VAS. Mobile operators and power utility Eskom pay a commission to Capitec and others for driving such sales.
While much of this activity has tended to happen through mobile and online banking channels or apps, part of the strategy shift is using MVNO services to drive up VAS sales further. Capitec recently signed a deal with MultiChoice that allows its customers to pay half price for Showmax as part of the VAS push.
FNB has previously reported that its customers purchase more than R17bn in prepaid services via its digital channels annually.
For a number of years, the largest MVNO player in SA was FNB. However, information communication technology research and consulting company Africa Analysis has reported Capitec Connect has emerged as SA’s largest MVNO, relegating FNB Connect to second place. Both players boast more than 1-million SIM cards in the market.
Capitec has brought the fight to traditional operators with its service. When it launched its mobile unit, it stood out by offering flat rates and data that does not expire.
The Stellenbosch lender said it challenged the excessive pricing and lack of transparency in the prepaid data and airtime sector. “We provide prepaid data, voice bundles and SMS bundles that are simple, affordable and transparent.”
Capitec said its data usage of 5.1-petabytes (5.1-billion megabytes) for the period was up from 1.4-petabytes at the same time last year. Voice usage more than tripled to 95.1-million minutes compared with 29.7-million previously.
The bank said the increase resulted from growth in the number of subscribers, “but more significantly from an increase in adoption and activity levels”. Effectively, each customer was consuming a larger amount of its mobile services through airtime and data.
MVNOs constitute about 2% of total mobile subscribers in SA. Banks, in particular, have launched these networks to increase consumption of their digital banking services.
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