MVNO boom is reshaping South Africa’s mobile market

South Africa’s mobile virtual network operator (MVNO) boom is having a positive impact on the health of the mobile telecommunications market by increasing competition and giving consumers wider choice.

This is the view of Johan Nel, senior management consultant at technology industry research and advisory firm BMIT, who said the positive effects of MVNO competition in the mobile market extend to the various sectors each virtual operator serves – retail or banking, for example.

“The MVNO market has started organising itself around sectors like banking, ISPs, media, telco and retail,” Nel said at a BMIT-hosted industry event in Johannesburg on Thursday. MVNOs typically provide own-branded services using infrastructure provided by the mobile network operators.

There are now almost 30 MVNOs in South Africa.

“Each subsector has mini-propositions where each player competes against its peers, other MVNOs and even the larger mobile network operators, which is very good for the market,” Nel said.

One of the most prominent examples of where an MVNO offering acts as a competitive differentiator is in banking, where Capitec Connect, Standard Bank Connect and FNB Connect use voice and data plans to bolster their core banking propositions.

The retail sector is another where MVNOs are contributing to higher levels of competition. The latest entrant into this market, Spar Mobile, offers data bundles as rewards to customers based on in-store spend. Spar Mobile joins PnP Mobile, Boxercom, Shoprite Knect Mobile and others in the grocery retail MVNO space.

Expanded reach

For traditional network operators – the likes of Vodacom, MTN, Telkom Mobile and Cell C – MVNOs serve as an alternative market penetration strategy. This was echoed by MTN South Africa CEO Charles Molapisi in a recent interview with TechCentral.

“There are customers that we can get to through our branding and distribution channels, but there are others that we cannot reach for whatever reason. But they may have an affinity with a different brand that we can partner with to reach them. Our MVNO strategy is not MVNO for MVNO’s sake, but to help us expand our reach,” said Molapisi.

Read: Capitec’s next big move in mobile

According to BMIT’s Nel, the proximity MVNO brands have to their customers also helps them develop offerings that are better suited to what consumers need. Citing Capitec Connect as an example, Nel said the view from the bank of how much their customers can really afford to spend and the frequency with which they purchase airtime and data provides leverage for customised offerings that improve customer loyalty.

“Telcos are enormous organisations with their own constraints – they can only move so fast and might have different priorities. It is hard to cater to every segment when you have around 30 million customers, but an MVNO can be more targeted in its approach,” he said.

MVNOs not only compete among themselves but also with the network operators that host them. Nel said the proliferation of MVNOs has also increased competition among the networks, which want to attract the strongest virtual players to strengthen their position in wholesale.

The benefit for incoming MVNOs is that the availability of options of infrastructure partner gives them more room to negotiate. It also opens the door to alternative business models like a multi-operator strategy in cases where the MVNO wants to maximise coverage for its customers.

BMIT predicts South Africa’s MVNO market will continue to grow and come to closely resemble countries like Mexico, where the combined value of MVNOs – these include Lyca Mobile and Walmart-owned BAIT – is larger than AT&T, a major network operator in that market.

However, Nel warned that there is no guarantee that incoming MVNOs will survive – they must, like recently launched Stadio Mobile, have a significant customers base they can leverage for scale. Stadio Mobile launched this week as South Africa’s first MVNO from a higher education institution.

Even so, Nel said he supports the idea of innovative brands coming in and trying new things in the market in much the same way that Virgin Mobile, South Africa’s first-ever MVNO, paved the way for the industry’s success.

“I think there is a danger for somebody who comes in with a good idea that doesn’t get to scale and they may, sadly, have to close down the business. From an industry point of view, however, you need guys who are at the bleeding edge of technology to drive it forward, because that creates a healthy, competitive ecosystem,” said Nel.  – © 2025 NewsCentral Media

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