The competition authority has ordered mobile network operators to reduce roaming fees, including those of MVNOs.
All the MVNOs piggyback on Cell C’s network, making them the biggest customers of the third-largest network operator.
Of Cell C’s 15.9-million subscribers recorded at the end of its last financial year, 1.9-million are from its MVNO partners.
Cell C CEO Douglas Craigie Stevenson said MVNOs have been a good segment in their business. Their success has been down to making it simple to run their operations on Cell C’s infrastructure and systems, he said.
In 2018, Cell C said it made R486m out of a total R7.8bn for the six months to June from its MVNO customers.
The first MVNO to launch in SA was Virgin Mobile, which entered the market in 2006. At its peak, the network is said to have had close to 500,000 subscribers but this is now estimated at about 200,000, said Steven Ambrose of Strategy Worx.
Virgin Mobile has been surpassed by FNB Connect, which has become the biggest MVNO after launching in 2015.
FNB Connect CEO Len Pienaar said that in an increasingly competitive sector “we needed to differentiate ourselves and be more customer centric than ever before by offering customers an end-to-end solution for both their banking and telco needs”.
He says the local MVNO market still lags more advanced markets, such as Western Europe and the Middle East, where in 2015 MVNOs made up 10%-40% of the market.
The global MVNO market is estimated to be worth about $60.6bn, according to US-based research and consulting firm Grand View Research. It estimates that the market will be worth $94.82bn by 2025, representing a 7.6% compound annual growth rate, driven by growing demand for data services, increasing numbers of mobile users across the globe and increasing internet services such as the cloud, the internet of things and mobile money.
Takaendesa said FNB Connect has “arguably been the most promising MVNO given the strong brand behind it and subsidies meant to retain more banking relationships with customers, but that has also failed to cross a million subscribers four years after launching in 2015”.
He said Telkom Mobile added more than 4-million subscribers in just 12 months to end-March to reach a total of almost 10-million subscribers.
Philip Short, an analyst at Old Mutual, said judging the success of an MVNO operator depends on the company’s strategy and brand.
Such operators are probably not out to dominate the telecom space but rather offer telco products as a value-added service to customers, bundled with banking products, as in the case of FNB. Such services may make it harder for customers to switch to competing banks, he said.