South African MVNO market hit R4.3 billion in 2023

Africa Analysis’ 2023 South African mobile virtual network operator (MVNO) report revealed strong growth in the industry.

Nine new brands have been launched in the local MVNO industry over the last three years, contributing to its rapid growth rate.

The market anticipates the arrival of at least two more MVNOs before June 2024, signalling ongoing expansion and competition.

Africa Analysis said there are 17 operational MVNOs in the South African market, contributing to the industry’s vibrancy and diversity.

South Africa’s MVNO ecosystem is primarily supported by two host mobile network operators, Cell C and MTN. Cell C dominates the market, carrying over 95% of the SIMs.

By December 2023, the number of MVNO SIMs surged to 4.3 million, marking a remarkable annual growth rate of 51%.

Notably, Capitec Mobile emerged as the largest MVNO, followed by FNB Connect. They both have over a million SIMs.

The MVNO retail market achieved R4.3 billion in 2023, underlining the sector’s economic significance.

Africa Analysis director Andre Wills said they expect the industry’s strong growth to continue over the next few years.

“By December 2028, analysts project the market to reach 10 million SIMs,” Wills said.

“Moreover, the potential entry of large retail brands could further propel growth, potentially elevating the market to 13.5 million SIMs.”

Customer service critical in the MVNO market

Wills said their research showed that it was critically important to have robust customer operations as MVNOs scale up.

“Pre- and post-sales support are identified as crucial factors in sustaining growth and enhancing customer satisfaction,” he said.

Senior consultants at customer experience technology and services company TTEC echoed Wills’ findings.

They identified four factors which are key to the success of an MVNO –

  • Powerful sales and distribution network – Be ready to act quickly based on market demands and customer expectations
  • Differentiated value proposition – Target untapped consumer sub-segments like travellers, specific professions, ethnic, or religious groups
  • Fair deal with mobile network partner – Establish a balanced revenue-sharing model in “pipe” leasing agreement with the MNO.
  • Existing customer base – Minimise marketing and additional operating expenditure by tapping into existing customers.

While many of South Africa’s MVNOs don’t publish data on their financial performance, some appear to be doing quite well.

According to former FNB Connect CEO Bradwin Roper, the operator was profitable as a standalone business by February 2022 after previously not being focused on profit.

Mr Price also recently revealed that its mobile division, which includes MVNO Mr Price Cellular, made R570 million in half a year. However, that includes device sales.


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