South African banking MVNOs thriving

Telecommunications products received the highest net sentiment ratings out of all banking products according to DataEQ’s South African Banking Sentiment Index for 2024.

The report is based on over three million public social media posts mentioning eight banks from 1 September 2021 to 31 August 2024.

The DataEQ team then used a combination of human and artificial intelligence to structure data accurately.

“Telecommunications products achieved the highest net sentiment among financial offerings, largely due to positive responses to mobile data and bundle options,” the report noted.

“Social media campaigns encouraging customers to share their favourite products helped boost engagement and drive positivity, demonstrating how promotions and competitions could enhance sentiment towards products and services.”

These products are known as mobile virtual network operators (MVNOs), which are telecommunications services that operate on another network’s infrastructure and spectrum.

DataEQ said that most of the conversation was driven by Capitec Connect.

As of August 2024, Capitec Connect had 1.2 million active subscribers, up from 900,000 a year earlier. Less than three months later, that number had grown to 1.4 million.

This made it South Africa’s biggest banking MVNO by customers, dethroning FNB Connect — the first telecommunications product a South African bank offered.

The third biggest bank-run MVNO is Standard Bank Connect, which has amassed over 300,000 customers since launching in 2018.

The MVNO was initially called Standard Bank Mobile but was rebranded in June 2024 as part of the bank’s strategic telecommunications direction.

In addition to introducing new data and voice packages, Standard Bank ended its partnership with Cell C and moved to MTN.

South Africa’s MVNO market has gained significant momentum recently, with subscribers almost doubling from just over 2.5 million to under 5 million since 2022, according to a report from advisory firm BMIT.

According to the report’s lead author, Johan Nel, this number is expected to grow to between 11 million and 12 million by 2029, yielding a compound annual growth rate of 18% and outpacing the mobile operator market.

Nel said he expected Cell C to continue to dominate the MVNO market, while banks and financial institutions, such as FNB and Capitec, are expected to dominate from a segment perspective.

The report argued that the MVNO market has shifted away from solely focusing on subscriber numbers and has turned its attention to building sustainable businesses from existing customer bases, driving retention for its core business.

“Banking MVNOs are therefore effectively competing among themselves, as well as competing with mobile operators,” said Nel.

“These are wholly new market dynamics and it is quite exciting to see this evolving within the market structure. Measuring customer value now goes way beyond merely comparing price per gigabyte.”