Profit for Capitec’s mobile unit doubled in the past financial year as the division continues to grow earnings for the bank’s financial technology portfolio.
The country’s largest retail bank by customers reported that Capitec Connect’s net income for the year to end-February rose to R442m from R193m previously.
The bank measures customers who are active on its network over 90 days. On this metric, subscribers with SIM cards that were active within the past three months rose to 1.5-million from 900,000 – a 67% rise.
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.
“Capitec Connect extended value beyond banking further by improving access to affordable connectivity and devices,” the bank said in its latest annual report.
“Clients benefit from reduced pricing on mobile devices delivered nationwide, with flexible payment options including cash, credit cards, access facility or purpose loans.”
Like others in the industry, 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.
As such, the lender 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 R4.4bn to group headline earnings, up 38% from R3.2bn a year before. Net transaction and commission income including VAS and Capitec Connect grew by 16% to R21.5bn in the period.
This portfolio — known as Capitec Fintech — now includes cross-border money transfers, airtime and electricity advances, as well as mobile device sales.
Since launch, 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. As part of the sell to customers, it also uses the mobile service to offer certain benefits, rewards and savings to its users.
The bank said Capitec Connect data and rewards granted to clients under its Live Better programme came to R108m for the year, while “data price reductions saved clients R330m”.
In addition, clients purchasing devices receive 5GB of complimentary data each month “for 12 months when linking their Capitec Connect number to their main account”.
Data usage, excluding reward data, grew by more than 100% to 40.5, while voice usage grew 1.5 times to 768-million minutes. Airtime lending activity totalled R97.3m in the year, compared with R24.4m previously.
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