Telkom is on the hunt for mobile virtual network operator (MVNO) clients to kick-start its book of wholesale customers, in an effort to make good on a licensing deadline.
SA’s MVNO market, expected to reach 10-million customers, has been growing over the past decade. The arena is now more crowded after a requirement that mobile network operators host at least three MVNOs as part of their spectrum licence conditions from 2022.
MVNOs are usually businesses not in the telecom sector. They include FNB, Standard Bank Mobile and Pick n Pay, who lease network infrastructure from mobile operators to sell data and voice services to their customers. Capitec, Old Mutual and FNB use Cell C’s network for their services.
Late on Monday, Telkom announced its entry into the market through a partnership with a mobile virtual network enabler (MVNE) platform provider said to have “a proven track record in the SA market”.
The mobile operator is specifically targeting clients in banking, insurance, retail “and beyond”.
The state affiliated company is hoping to use this deal to meet the regulator’s requirements “while identifying and onboarding multiple MVNOs to strengthen its competitive position in the MVNO market”.
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 entirely away from Cell C as MTN did with Standard Bank.
“The MVNO market is an exciting space, and we are eager to bring our network capabilities and infrastructure to enable and support new entrants,” said Lunga Siyo, Telkom CEO for consumer and small business.
“We are streamlining MVNO entry with a structured, scalable single-platform model,” he said. “This simplifies integration, reduces operational complexity and ensures reliable network access.”
With Telkom now in the game, that leaves Liquid Intelligent Technologies and Rain 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 about 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. C-Connect and Old Mutual — which will soon launch its banking operation — are the two most recent companies to have activated their services using Cell C.
The Africa Analysis MVNO report from February 2024 estimates the market’s potential revenue at R83.6bn.
“Since the sector’s inception in 2006, it has experienced steady growth, with subscriber numbers increasing by 51% year on year by the end of 2023, reaching 4.3-million users. This growth is driven by consumer affinity, particularly to financial services providers, retailers and niche brands,” said the firm.
“These businesses seek to create unique branded mobile products and services, develop new value propositions and value-added services to enhance customer engagement for their own customers.”
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 MVNO services.
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