Capitec says it has grown profit on its mobile unit almost six-fold in the past financial year as the division increased its customer numbers by three quarters to 1.6-million over the same period.
SA’s largest retail bank by customers reported that Capitec Connect’s net income for the year to end-February rose to R193m from R35m previously.
Subscribers with SIM cards that were active within the past six months rose 74%.
Capitec Connect is the bank’s mobile virtual network operator (MVNO) business. MVNOs are usually non-telecom 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.
Capitec’s mobile unit started contributing positively to the bank’s earnings in the 2024 financial year.
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 value-added services (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 further drive VAS sales.
Capitec said its net transaction and commission income, including VAS and Capitec Connect, was one of the main drivers of growth for the bank.
These lines of business contributed R3.1bn to group headline earnings, up 55% from R2bn a year prior. Net transaction income and commission excluding VAS grew R1.1bn while growth in VAS contributed R833m to profit before tax.
For a number of years, the largest MVNO player in SA was FNB. However, information and communication technology research and consulting company Africa Analysis has reported that Capitec Connect has emerged as SA’s largest MVNO, relegating FNB’s unit to second place.
“Capitec Connect bundles are simple and transparent and are priced below the rest of the market,” the bank said.
Capitec has brought the fight to traditional operators with its service. The bank is famous for being one of the only mobile providers to offer data packages that do not expire.
In the period, Capitec Connect expanded from offering one no-expiry data and voice bundle to “providing various options for our mobile clients. We introduced one-, seven- and 30-day validity bundles at the most affordable prices in the market.”
These bundles now account for more than 60% of sales.
The bank also launched streaming, WhatsApp and larger LTE data bundles. “Capitec Connect cash vouchers are available, and clients can use advances to purchase airtime. Capitec Connect data is part of the Live Better rewards programme, offering benefits like 1GB of free data per month for credit card holders with verified Capitec Connect numbers,” it said.
More rewards would be added in the 2026 financial year to reward “good banking behaviour”, Capitec said.
Net transaction and commission income excluding VAS and Capitec Connect increased 17% to R12.8bn, while transaction volumes excluding system-generated transactions increased 17% due to growth in client numbers.
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