While mobile operators are wading into the financial services game, FNB has quietly gone about building a sizeable telecommunications business.

The bank had amassed "well over 600,000 subscribers" within FNB Connect, the telecommunications unit that was launched in mid-2015, said Shadrack Palmer, chief commercial officer at the division. "We had 600,000 subscribers at the end of December and we’ve added a significant number of subscribers in January and February, coming off the campaign we ran in November, December and January where we gave a lot of data to customers to get them to pick up our SIM," Palmer said.

That implies that FNB Connect’s market share in the mobile communications segment is closing in on 1%, since there are about 90-million active mobile subscribers in SA. While the unit pales compared with the likes of Vodacom, which has 40-million customers in SA, its subscriber base has grown fast.

FNB Connect, linked to the bank’s eBucks rewards programme, offers voice and data-enabled SIM cards to the bank’s customers and sells its own and third-party mobile devices.

The division had sold about 100,000 FNB-branded smartphones, Palmer said. These phones are custom-made by Chinese multinational ZTE. FNB Connect is one of several mobile virtual network operators (MVNOs) in SA.

It and other operators such as Virgin Mobile, MRP Mobile and me&you mobile rent network infrastructure from Cell C.

At the end of December 2017, CellC had 1.5-million virtual network operator customers, with FNB Connect accounting for 600,000 of those, according to data from the companies.

Cell C is the only mobile operator in SA to have opened its network to MVNOs. "In the total MVNO market, there’s definitely some room for growth. We’re also looking to see how we can get a lot more competition in this space to allow us to have some level of influence from a regulatory perspective to have some level of protection," Palmer said.

The regulatory environment remained "challenging" for MVNOs, though the government aimed to tackle this through the information and communications technology policy white paper, which is aimed at spurring competition. "The only challenge is that it’s not gone far enough," said Palmer. "It’s proposing that it’s compulsory for networks to have at least three to five MVNOs on their network, but it’s not adequately addressing the challenges of what the wholesale rate or pricing will be from those networks."

"It’s one thing allowing access to the network, it’s something else to price it at a level that will allow you to compete," he said.

Palmer said that while FNB Connect had operated fairly independently in its first two years, "now the focus is on integrating it a lot more into our core banking value proposition" to boost growth.

The bank planned to bundle FNB Connect SIM cards with all new cheque accounts from later in 2018, he said.

Customers would be able to get a cheque account with a SIM card "that comes with value" as part of the normal banking offering, he said.