Mobile virtual network operators (MVNOs) are gaining momentum in South Africa, with banks, retail stores and independent brands launching their own mobile services.
Instead of building their own network, an MVNO uses the mobile network infrastructure provided by a mobile network operator to offer mobile products and services.
While it does not have its own network, an MVNO controls distribution and is responsible for customer support, billing, product development and its value-added services.
In South Africa, Cell C is the dominant network provider to MVNOs, and numerous companies currently offer products in partnership with the operator.
In August 2018 Cell C said there are 1.7 million subscribers using MVNO services on its mobile network, and that this number continues to grow.
The biggest MVNO in South Africa is FNB Connect, which had 670,000 active users at the end of 2018.
What it takes to be a successful MVNO
Speaking at the 2019 MyBroadband Mobile Network Conference, FNB Connect CEO Len Pienaar highlighted six main things which are needed to be a successful MVNO.
Pienaar said a mutually beneficial relationship with a network provider lays the foundation for a strong MVNO.
A company should also have access to a niche customer base and have a strong brand which can help to market the service.
Operationally, an MVNO should run efficiently and provide excellent customer service to its subscribers.
It should also offer something different from the usual offerings to clients and be able to reach significant scale to be successful.
The future of MVNOs in South Africa
Pienaar predicts that South Africa will see the launch of many more MVNOs in the next few years.
He expects that many companies with large customer bases, including banks and retail chains, will launch their own mobile services.
While some of these will be successful, Pienaar expects many MVNOs to struggle to reach the necessary scale to make them successful.
With smaller MVNOs set to struggle to make ends meet, Pienaar expects to see consolidation in the MVNO market in the medium term.