Vodacom is on the hunt for more mobile virtual network operators (MVNOs) to add to its book of wholesale customers, and is specifically targeting a banking client, in a bid to expand its offering.
Vodacom activated its first MVNO customer, Mr Price Mobile, in September and also created a mobile virtual network enabler platform. Mr Price has run its mobile unit since 2014, using Cell C’s network.
MVNOs are usually businesses not in the telecom sector — they include FNB, Standard Bank Mobile and Pick n Pay — that lease network infrastructure from mobile operators to sell data and voice services to their customers. Capitec, Standard Bank and FNB use Cell C’s network for their services.
Banks now have the most customers using their MVNO services, making this an attractive segment for telecom firms.
“We have a retailer on board. We wouldn’t mind having a bank as well and we are definitely in multiple talks with different existing or not yet existing MVNOs,” Shenge Buthelezi, managing executive for wholesale and carrier services at Vodacom SA, told Business Day.
Banks, in particular, have launched these networks to increase consumption of their digital banking services.
“We will be onboarding more high-value MVNOs in the near future. But our target again is not X number over time,” Buthelezi said.
“It’s more about having a couple of good [clients] that are in the value-creation space, that are looking to enhance their core business by mixing it with telcom services, driving either better behaviours that help their business, driving better loyalty and rewards.”
For many years Cell C was the only telecom firm providing MVNO services, but licensing reforms by the regulator and expectations of market growth have encouraged MTN to take the market more seriously. Now the second-largest operator, it lured Standard Bank away from Cell C in June.
Vodacom only recently entered the market and will not say whether it is looking to take Mr Price completely away from Cell C as MTN recently did with Standard Bank.
Buthelezi would say only that Vodacom was “a trusted partner and enabler of Mr Price’s strategy. My aim is to show them that they can connect with confidence on Vodacom. I can’t share their full numbers yet, but they have since August been enabling thousands of new activations on Vodacom.
“When they feel the time is right, whichever way they do things, they will definitely make that decision, but for me, it was to enable them to start connecting on Vodacom, enhance their services, to ramp up and basically provide better value than they’ve being able to [get] before, which is the reason that they have Vodacom on board.”
Rivals Telkom, Liquid Intelligent Technologies and Rain have yet to secure MVNO clients.
For a number of years the largest MVNO player in SA was FNB. However, Capitec Connect has now emerged as SA’s largest MVNO with 1.2-million customers, relegating FNB Connect to second place. FNB has almost to 1-million SIM cards in the market.
MVNOs constitute about 2% of total mobile subscribers in SA, though Cell C sees enough room in the market to have as many as 10-million MVNO customers on its network alone.
This estimate is supported by information and communication technology research firm Africa Analysis. Earlier this year, the firm said South Africans should expect two more MVNOs to enter the local market in 2024. Since then C-Connect and Old Mutual — which will soon launch its banking operation — have activated their services using Cell C.
The concept of MVNOs is popular in Europe, the home base of Vodacom’s parent, Vodafone. The SA business has invested in the same technology platform used by Vodafone for its MVNOs services.
“We’ve invested in a platform and not just any platform. The provider we chose ran in excess of 3-million customers at Vodafone Spain. We definitely put in a scalable and reliable platform. Our point is to then sweat that asset, [and] also attract high-value MVNOs,” Buthelezi said.
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