Piggybacking on a network operator is nothing new. A few have tried. And a few have thought about trying.<\/p>\n
Virgin Mobile<\/a>, which launched with huge fanfare and equally huge promises in 2006, hasn\u2019t exactly been a roaring success. It\u2019s stuck somewhere between 400 000 and 500 000 customers. In 2011, Cell C<\/a> sold its half of the joint venture to obscure Bahamas-outfit Calico Investments. Last year, the entire business merged with Middle Eastern mobile virtual network operator (MVNO) Friendi. Virgin HQ surely finds something attractive about the mobile space \u2013 it\u2019s got ten such operations worldwide.<\/p>\n Red Bull Mobile<\/a> had an equally loud and lavish arrival to South Africa in 2011. Its performance has been even more muted than Virgin and relies on Cell C for practically everything, including its sales channel. With under 100 000 subscribers, one wonders how long the agreement between Cell C and the Austrian company still has to run.<\/p>\n Analysts have been predicting a rush of MVNO entrants for nearly the past decade. Rumours swirled about Pick n Pay and Kulula both considering an entry back in 2008. At least one of those had a serious look, and one of them may just be dusting off the business plan.<\/p>\n Last week, we had French operator Orange<\/a> saying it was looking to launch a presence in South Africa through a mobile virtual network operator (MVNO). But its retail partnership with Nashua Mobile (which represents three of the four operators) could make things rather tricky when it gets to the negotiating table. I\u2019m not sure Nashua Mobile<\/a> boss Mark Taylor<\/a> has thought this bit through.<\/p>\n FNB<\/a>\u2019s is the latest name to surface, this time in a\u00a0MyBroadband report<\/a>, citing talks between the bank and Cell C.<\/p>\n It\u2019s not a stretch to see why FNB would want to launch a mobile offering. It already has a vibrant ISP business which offers bundled ADSL data and VoIP minutes to customers in the form of rewards. From July 1, clients who have bought smart devices from FNB also qualify for monthly 3G data rewards.<\/p>\n The numbers are compelling. FNB has around 8m customers. Of those, 1.5m use online banking, with 500 000 actively using its smartphone and tablet app. It\u2019s sold close to 150 000 smart devices, with a third of that number alone coming in the second half of last year.<\/p>\n Selling these devices bundled with \u2018FNB Mobile\u2019 contracts would provide a natural base for the business. And, while FNB wouldn\u2019t simply want to be a reseller of Cell C\u2019s products (which in some ways both Virgin Mobile and Red Bull Mobile are doing), an aggressive tie-in with its eBucks rewards programme will make sense. And it\u2019ll get that subscriber number to scale very quickly.<\/p>\n Also, what FNB has (and which Virgin and Red Bull don\u2019t) is distribution. It\u2019s proved that over and over again. It also knows its customers very well.<\/p>\n The logic is there. But the business case needs to make sense.<\/p>\n You can be sure FNB has had a long, hard look at the mobile space in the past. One also gets the feeling it wants to guarantee it can offer something more substantial than Discovery\u2019s half-baked Vitality Mobile product (all this offers is free on-network calling and somewhere between 100MB and 400MB of additional data on four specific Cell C contracts).<\/p>\n Cell C, under Alan Knott-Craig<\/a>, has already demonstrated its willingness try (almost) anything to grow its subscriber base. Could FNB Mobile be more successful than Virgin Mobile? Definitely.<\/p>\n An additional 500 000 customers in a relatively short space of time on a base of just over 11m is a meaningful number, especially in a mature market. And those half-a-million will be higher-value contract customers.<\/p>\n The big question is whether Cell C can sustain its recent levels of growth with a network infrastructure that is creaking and often battles to cope, especially when it comes to data. There is sufficient anecdotal evidence of subscribers porting back to their original networks to suggest that in some cases, Cell C may have over-promised and under-delivered.<\/p>\n Any deal would have to take this into account. Providing support to unhappy customers on a network that\u2019s completely out of control is a big risk.<\/p>\n If FNB makes the first move, will the other banks rush to play catch-up? Who will they partner with? MTN<\/a> and Standard Bank<\/a> have worked together in the past, and Vodacom<\/a> and Nedbank<\/a> are partners on M-Pesa. However, the former dissolved quietly and, with Vodacom attempting a third launch of M-Pesa in the country later this year, the latter doesn\u2019t exactly seem to be healthy.<\/p>\n Will Vodacom or MTN even look at MVNO partnerships? Given that Vodacom is increasingly following the Vodafone playbook, that is unlikely. And I don\u2019t see MTN rushing to participate in the space.<\/p>\n What is strange is that no one has approached Telkom Mobile (nee 8ta) as an MVNO partner. Perhaps its roaming agreement with MTN precludes it from \u2018on-selling\u2019 services. Perhaps not. Telkom group chief executive\u00a0Sipho Maseko said last week<\/a>\u00a0that everything was \u201con the table\u201d when it came to the future of the operator.<\/p>\n Right now, (having used both in the past few months), I\u2019d rather be piggybacking on Telkom Mobile\u2019s network than Cell C\u2019s.<\/p>\n * Hilton Tarrant contributes to ‘Broadband’, a column on Moneyweb covering the ICT sector in South Africa. A half-baked offering won\u2019t make a difference to the South African market, but a differentiated offer will be very, very good for competition.<\/em><\/p>\n Source: Moneyweb<\/a><\/p>\n FNB plans to launch mobile operator: sources<\/strong><\/a><\/p>\n Cell C to sign another virtual operator agreement<\/strong><\/a><\/p>\n Orange wants to take on MTN, Vodacom, Cell C and Telkom Mobile<\/strong><\/a><\/p>\n Virgin Mobile CEO slates Vodacom, MTN in report<\/strong><\/a><\/p>\nMore on FNB and MVNO<\/h3>\n