Absa launching mobile operator to take on Capitec Connect
Absa has shortlisted two companies to provide wholesale services for its own mobile virtual network operator (MVNO), Cell C CEO Jorge Mendes has revealed in an interview with the Business Times.
Cell C is one of the shortlisted companies; the other’s name was not revealed. Absa’s MVNO will compete against the likes of Capitec Connect and FNB Connect.
In addition to vying to be Absa’s mobile virtual network enabler, Cell C has revised its deal with Pepkor and has bought over Shoprite K’nect’s customers.
At the Digital Council Africa’s recent Conext conference in Bryanston, Mendes told attendees that they had signed an agreement with Pepkor to add Cell C to FoneYam, its cellphone rental business.
Foneyam operates through three Pepkor retailers: Pep, Ackermans, and Dunns. It offers 13-month smartphone rentals with bundled insurance covering theft, loss, death, and disability.
It guards against people who might abscond with their rental device by having security features that allow it to remotely lock a smartphone if a customer misses their monthly payment.
Speaking to Business Times, Mendes said K’nect’s subscriber base was very small, about 150,000, and that the acquisition was “a unique MVNO deal structure”.
Mendes also told Conext attendees about the Shoprite K’Nect acquisition. He said they were currently testing the offering with staff, and the rollout started two months ago.
After the staff rollout, they will launch in all Shoprite’s roughly 3,000 outlets. Mendes said they hoped some of Shoprite’s 8.7-million money market customers would sign up to K’nect.
Mendes said about 10% of Cell C’s revenue was derived from its wholesale business. He said the company was focusing on its MVNOs, as they are one of its key revenue streams.
South Africa’s MVNO market has grown significantly in the past year, which has helped bolster Cell C’s revenues and subscriber numbers.
Capitec Connect rescues Cell C
Data from a recent presentation about Cell C showed that its subscriber growth is coming almost entirely from its MVNO partners, specifically Capitec Connect.
The company prepared a presentation as a follow-up to majority owner Blue Label’s recent annual financial results, which disclosed further details about a possible listing of Cell C.
Although Cell C is starting to show some signs of a financial turnaround, including reporting its first-ever profits, its subscriber numbers have been stagnant or declining for years.
A chart published as part of its presentation shows that Cell C went from having 10.7 million of its own subscribers in 2022 to 7.6 million in May 2025.
This is even more concerning when considering earlier figures. Ten years ago, Cell C reported having around 20 million subscribers. However, it has undergone significant declines since December 2015.
While Cell C’s subscriber decline stabilised around 6.5 million in August 2023, it hasn’t shown much growth in its prepaid subscriber base since then.
Its postpaid subscriber base has continued declining, from around 1 million customers in 2022 to 800,000 by the end of May 2025.
It should be noted that Cell C’s figures for its prepaid and postpaid base include enterprise and fibre-to-the-home customers.
When including its MVNO customers, Cell C’s subscriber base has been growing since August 2023.
One of the most significant contributors to this growth has been Capitec Connect, which launched in September 2022 and reported having 1.1 million active SIMs by 31 August 2025.
While the phenomenal growth of MVNO partners like Capitec Connect is good news for Cell C, it is a double-edged sword.
Cell C faces increasing competition from much larger players like MTN and Vodacom in the MVNO space, with Telkom also entering the ring soon.
Part of the reason for MTN and Vodacom encroaching on Cell C’s turf is that their new radio frequency spectrum licences from sector regulator Icasa require them to.
This has resulted in Cell C losing MVNO partners like Standard Bank and losing exclusivity with First National Bank. FNB Connect had been one of Cell C’s most successful partnerships.
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