MTN pushes for SA mobile virtual network operator dominance

MTN is looking to take over the market for mobile virtual network operator (MVNO) services in SA, a space currently dominated by Cell C. 

MVNOs — which include Mr Price Mobile and Standard Bank Mobile — constitute about 2% of total mobile subscribers in SA. They are usually non-telecom businesses that lease network infrastructure from mobile operators to sell data and voice services to their customers.

Cell C has been the largest MVNO for a number of years but is now facing growing competition from the likes of MTN, which has been mandated by the government to offer similar services in the market. 

“The MVNO business is where we really want to put a lot of focus into,” Quintus de Beer, wholesale executive at MTN SA, told Business Day.   

Wholesale refers to the services that mobile operators offer to fellow industry players, carriers or service providers. These services can include extending network capacity for a customer, buying from one another for internal projects, or purchasing services and reselling them as part of a specific application.

In MTN's case, this includes carrier services such as interconnect, which allows for linking customers on different networks; fixed services, which include the company’s fibre to the home unit; and managed services such network roaming. 

As part of the group's strategy in SA, MTN wants its wholesale business to be the “go-to” network partner of choice, with MVNO being a big piece of the plan.  

“The interconnect market is very much regulated and [there are] only so many partners that you can do business with. So it’s a kind of a maintenance business but also enhancing the products that we can inside of it,” De Beer. 

“The fixed services, we definitely want to expand on. We’ve got very good fibre assets that we can put into the market.”

Competition appears to be heating up in the MVNO space. While MTN is putting a lot of money behind this piece of business having recently signed Pick n Pay and MultiChoice as customers, Cell C is not resting on its laurels after completing a long awaited recapitalisation. 

In 2022, Capitec became the latest on Cell C’s roster of MVNOs. For SA's fourth largest cellphone company, this piece of business accounts for about 10% of its customer base and 15% of revenue.

Huge Group, famous for its 2021 bid to buy out Sbu Shabalala's Adapt It, is looking to leverage its investment in Tethys Mobile —  which previously operated as Virgin Mobile in SA — to compete in the MVNO space as well. 

Andre Wills, MD of ICT research firm Africa Analysis, said: “It has become an important part of mobile network operator’s strategy is to look at the MVNO space simply because the market has really started to grow and it's driven not necessarily by the mobile network operators, but by big, well-known brands deciding that they're going to enhance the value proposition to their customers by offering a mobile service.

“The latest big brand to do that was Capitec, which launched last year. They certainly created quite a stir in the market and lot more interest has been expressed ... it’s the success of the well-known retail brands that actually makes the biggest impact.”

Pick n Pay launched its mobile offering as part of a push to attract people to its loyalty programme and boost sales through the provision of data and voice services. 

MultiChoice on the other hand, signed a deal for its DStv internet offering allowing fixed broadband access and streaming to its customers, through MTN, particularly in areas where it can't offer fibre. 

FNB Connect — which sits on Cell C network — is the largest MVNO in the country with close to 1-million customers. The bank uses its network as a means to get more people to use its digital banking channels. 

All this comes as MTN hired FNB Connect’s CEO Bradwin Roper earlier this week to head up its financial services unit in SA from May. 

gavazam@businesslive.co.za