Cell C slashed virtual network operator prices

Cell C has repriced its mobile virtual network operator (MVNO) business to be more competitive for its partners, rather than focusing on banking margins.

This was revealed by Cell C CEO Jorge Mendes during a recent questions and answers session with members of the media.

According to Mendes, Cell C has grown revenue in its MVNO business by 20%, while traffic has increased by over 80%.

Competition in the mobile virtual network enabler market is heating up, with MTN and Vodacom vying for a slice of what was once Cell C’s exclusive domain.

Part of the reason for the increased competition in the mobile wholesale arena is that it was written into the licence conditions for the high-demand radio frequency spectrum Vodacom and MTN bought at auction in 2022.

However, South Africa’s two biggest operators have also been building their wholesale offerings for many years prior to the auction.

Several Internet service providers have packaged and sold products on the MTN and Vodacom networks over the years, but the number of non-telecommunications players offering MVNO services has exploded in recent times.

More established MVNOs include Afrihost Air Mobile and Axxess on the MTN network, and FNB Connect on Cell C.

Axxess has also recently launched Vodacom uncapped fixed wireless access LTE and 5G deals, followed by Mr Price launching mobile packages on Vodacom’s network.

An interesting development regarding Mr Price Mobile is that Mendes revealed the MVNO is offering Vodacom and Cell C-based services.

Mr Price Mobile was initially exclusive to Cell C, but Mendes said they have adopted a dual vendor strategy, allowing MVNOs to partner with multiple networks and allowing customers to choose which offer is best for them.

This is in contrast to Standard Bank Connect, which elected to migrate its MVNO from Cell C to MTN earlier this year.

However, while Cell C may have lost Standard Bank, it gained a major player in the form of Capitec last year.

Capitec Connect has seen huge growth, recording a net income of R69 million in the bank’s half-year results for the six months ended 31 August 2024.

This was up from the R35 million net income the MVNO earned during the 2023/24 financial year.

Capitec noted that the R69 million figure is up from R4 million in the same six-month period the year before.

As of August this year, Capitec Connect had reached 1.2 million SIMs, of which 50% generated revenue within the past 30 days.

The MVNO also revealed data usage figures for the past three half-year periods, with usage reaching 5.1 petabytes in the half-year ended August 2024.

Mendes said that Cell C has thirteen MVNO customers, with a few others in the pipeline, and recently launched with Old Mutual.

Old Mutual will soon launch a new bank in South Africa that aims to take a bite out of Capitec’s upper mass market and lower affluent customer base who earn between R5,000 and R80,000 per month.

“There’s some cool stuff happening there, and we want to make sure that we align from a personalization perspective on behaviours on the MVNO side,” Mendes said.

“I think that’s where the real attractiveness lies. It’s not just throwing wholesale minutes and petabytes over the fence and hoping they do something with it.”

For example, with Capitec they are exploring a reciprocal partnership of encouraging certain customer behaviour that benefits both companies.

“We want to make sure that we partner very deeply,” said Mendes.

“We’re looking at what the banking behaviours are we want to unlock through telecommunications and what are the mobile subscriber behaviours we want to unlock with financial services, and how do we partner,” he said.

“So that’s what’s starting to happen in that space. Same thing with FNB, we’ve re-signed there, and it’s going really well.”