Capitec coming for MTN and Vodacom in South Africa

Capitec’s mobile network service has seen tremendous growth since launch, with the bank eyeing 10 million clients in the next two to three years.

While ambitious, CEO Graham Lee said this is a goal the bank continues to strive towards, with accessibility set to play a key role in attracting more customers.

In addition, Capitec’s impressive economies of scale and massive existing client base are expected to set the bank up for success in this increasingly competitive market.

A decade ago, telecommunications companies like MTN and Vodacom ruled South Africa’s mobile service offerings.

However, in the past decade, an increasing number of financial service institutions have entered this market with their own offerings.

This was seen as a logical move for banks, in particular, as many South Africans already purchase data and airtime through their banks, and setting up a mobile network service is an easy way for them to expand their offerings.

However, it is important to distinguish between mobile network operators (MNOs) like MTN and Vodacom and mobile virtual network operators (MVNOs).

Running a mobile operator and maintaining a network are expensive, requiring significant investments in technology, infrastructure like cell towers, and ongoing maintenance.

These companies also buy and hold spectrum licences from the government, which allows them to operate their networks.

In contrast, MVNOs like Capitec Connect, FNB Connect, and Standard Bank Mobile do not own their infrastructure. Instead, they use the networks of established providers.

This makes it significantly cheaper and easier for these companies to provide mobile services, as they do not need to build their own network infrastructure or purchase spectrum.

However, this also means the space is becoming highly competitive, with both MVNOs and MNOs fighting for market share.

Therefore, to differentiate its offering from the many others South Africans can choose from, Capitec decided that its MVNO would offer data that does not expire and some of the most inexpensive data offerings on the market.

This, along with Capitec’s massive existing client base, which reached nearly 25 million customers in its latest results, has seen Capitec Connect boom in recent years.

Considered ambition

Since its launch in 2022, Capitec Connect has seen significant growth, with net income reaching R165 million in the company’s latest interim results for the six months ended 31 August 2025.

This reflects growth of over 139% compared to the six months ended August 2024. The service also hit a milestone of 1.1 million clients in this period.

Lee highlighted Capitec Connect as one of the two areas of the business he is particularly excited about.

“Capitec Connect is not only about contributing to the bottom line. It’s not only about generating revenue. It is to create value for our clients,” he explained in the bank’s interim results presentation. 

“So, as we scale, we will continue to drive down prices and give more data as give-backs to reward our clients for good banking behaviour.” 

Despite the already impressive growth of this service, the bank continues to invest in Capitec Connect, with its eyes set on near-exponential growth.

A particular focus for this service has been rewarding customer loyalty through various give-back rewards.

Capitec has already given back 449 terabytes to clients since 1 March 2025, and started a new give-back for clients.

This new give-back is rewarded to customers whose Capitec Connect SIM is the SIM for their verified number for banking. These clients will receive an extra 20% free data with every single purchase. 

Because of these loyalty rewards, Capitec more than tripled its data usage, which now stands at 14.9 terabytes. For reference, 15 terabytes is equivalent to streaming around 4.3 billion songs.

Capitec also recently launched device sales through its app, with users now able to order any one of 22 devices through their banking app. Lee said this range will continue to grow.

With that device purchase, Capitec will also give clients free data and a “best in market” finance offering with a 0% deposit and the lowest finance charge. 

“We are going to change how our people get access to smartphones, and through that, increase the number of people who have them, who use our app, who use our other digital services,” Lee said.

Through these efforts, Capitec hopes to create a virtuous cycle – offering lower prices and more savings will attract more customers to the service, creating economies of scale that will allow the bank to drive down prices even further and give more rewards to existing and new clients.

Lee told Daily Investor that the 10 million figure the bank is eyeing for Capitec Connect is ambitious, but “it is something that we will strive towards”.

For reference, Vodacom has 55 million customers, MTN has 40 million, Telkom has 24 million, and Cell C has 7.5 million.

“The way that we intend to do it is by making it more accessible,” he explained to Daily Investor, adding that this is one of the reasons why the bank has started selling devices.

Putting more smartphones in Capitec clients’ hands will enable them to use data effectively and, essentially, receive the additional value of all of the rewards and givebacks that Capitec clients with smartphones receive. 

“But more importantly than that is scale. We plan to use our scale to continue to create economies and to pass those economies back to our clients in the form of lower prices and more data givebacks,” he explained.