It’s MVNO calling

South Africa’s mobile virtual network operator (MVNO) market is booming, with around 23 players serving an estimated 4.8 million active subscribers at the end of 2024.

BMIT’s MVNO report says the market for these “mobile resellers” is predicted to more than double to around 12 million by 2029, at a compound annual growth rate of 18%. The selling point for these players is simplicity, flexibility and value for money, something they’re able to provide because they’re piggybacking on somebody else’s infrastructure.

In the majority of cases, that somebody is Cell C, which has found success, despite being a smaller operator, by providing services to diverse customer segments to gain market share. Unlike its larger counterparts – most of which resisted supporting MVNOs on their networks – Cell C has been a pioneer, and now has around two-thirds of operators on its network. Cell C was the only network to offer an enablement platform for MVNOs since 2006, until MTN entered the fold in 2020. Vodacom recently joined the wholesale market when it signed its first MVNO client – Mr Price Mobile – in the latter half of 2024. Vodacom’s move aligns with Icasa’s “MVNO enablement” push, which was outlined during the 2022 spectrum auction when the regulator said mobile operators must support market expansion.

Telkom announced plans to allow MVNOs on its network in 2023, but is yet to officially do so, claiming to be in the final stages of its rollout plans. Rain, the country’s smallest network, has onboarded two MVNOs, but is yet to launch its commercial operation.

We launched Capitec Connect because we felt that some of the bigger players were exploiting their clients.

Dalene Steyn, Capitec

With so much movement across the sector, there has been a shift in the MVNO business model. Where early players earned market share by being aggressive about price, newer players – many of whom already had established brands and an existing customer base – offer shared-value business models, with the goal being to provide their customers with a more personalised experience.

But just because the market is booming doesn’t mean that everyone who ventures into these waters is winning.

By August 2024, 34 MVNOs had been launched in South Africa since 2006, with about half still operational. This high failure rate has, in part, been attributed to a lack of regulatory support for the sector. There is still no licensing framework for MVNOs in South Africa, which means they have commercial standing, but no legal standing, says Africa Analysis’ MD, Andre Wills. This is problematic because the most successful markets have some kind of licensing framework supporting the sector, which clearly defines MVNO rights and obligations.

Dalene Steyn, Capitec

---

Andrew Soley, head of Pick n Pay Cellular/ PnP Mobile, says consumers are always looking for value other than just data and airtime. This is where MVNOs from other industries – like banks, retailers, insurers – have the upper hand. “While the networks can give customers competitive pricing on airtime and data, MVNOs are in a strong position to provide customers with additional value.” The retailer established PnP Mobile in 2020 and was the first MVNO to run on MTN’s mobile network. Soley says the goal was to offer greater value and more benefits to its 11 million-plus customers who are signed up for its Smart Shopper loyalty programme.

Customer retention in the prepaid market is a big challenge, he says. Most customers have several SIM cards and will switch between networks when they run promotions. This is why PnP wanted to come up with a way to better connect with its customers and reward them, while also attracting new customers by handing out free data as a reward for shopping and swiping their Smart Shopper cards.

Jason Jones, the head of commercial operations at The Foschini Group (TFG), says customers want flexibility, which is why it offers month-to-month subscriptions that customers can cancel at any time, and also switch between packages whenever they choose.

And, by offering deals linked to a firm’s broader business operations, customer relationships will be strengthened, with more engagement touchpoints, says Jones. “If we’re just reselling products from the big network operators, we can’t create our own packages, run campaigns and promotions or offer rewards based on what our customers want and what we know about them,” he says. TFG Connect was launched in 2022 and runs on MTN’s network.

TFG owns brands like Foschini, Markham, Sportscene and Jet, and customers are rewarded for shopping at its stores. The company has one of the largest retail credit account bases in the country, and these customers, as well as TFG Connect SIM holders who subscribe to its retail publications, are being offered benefits. TFG’s free data for shopping promotion, for example, gives customers 50% of their shopping bill back in data. If a customer spends R1 000, they earn 500MB. “An average customer who has a magazine subscription, pays their account on time and shops regularly will receive about R150 of free airtime and data just for doing things that they were doing anyway,” he says.

Consumers are looking for better value, innovation, affordability and convenience, says Irisha Ramsingh, head of products and enablement at Old Mutual Finance. The insurance brand is a latecomer to the market, having launched its MVNO, called Old Mutual Connect, in October 2024. Using Cell C’s network for high-speed mobile services, she says that it wanted to provide products that are easy to understand, with no expiry date. Its strategy is to reward users for being active, with new customers earning a free 1GB daily for the first month and then a free 1GB every month, provided the subscriber continues to use the service.

Simplicity is also part of Capitec Connect’s value proposition, says head of Capitec Connect, Dalene Steyn.

Capitec is now the biggest bank by customers numbers – around 23 million – and is the biggest seller of data and airtime in South Africa. It also sells 40% of all prepaid airtime in the country “Our clients were already coming to us to buy data and airtime, which meant that we knew a lot about their mobile phone use and habits. With these insights, it made sense for us to create a product just for them,” says Steyn.

The MVNO, which runs on Cell C, has seen strong growth since it entered the market two years ago. Capitec Connect is currently the biggest MVNO in the country with around 1.6 million active users. The service is also growing consistently. According to Steyn, it sold over 200 000 SIMS in January 2025 alone. “We launched Capitec Connect because we felt that some of the bigger players were exploiting their clients. Their data prices were ridiculously high, and it seemed like their deals and packages were deliberately complicated, making it hard for customers to figure out what the best option is,” she says.

Steyn says Capitec Connect steered away from hidden terms and conditions and restrictive validity periods in favour of an easy onboarding process and simple product offerings. SIMs are also available in branches. “We launched with a very simple and transparent value proposition, selling data and voice minutes that didn’t expire.” The bank also learned that some clients would rather have their data expire if they can pay less for it. Clients can also take an advance for airtime and data with the bank’s Connect Advance product, which they can repay within 30 days.

Lifestyle and behaviour-driven value propositions are essential for new players that want to stand out in a market that is getting increasingly crowded. TFG Connect uses triggers to encourage positive behaviour; when a customer pays their account on time, they receive R26 airtime, says Jones. “And when they pay late, we’ll alert them to the fact that they missed out on R26 free airtime. The hope is that these nudges will make them think twice about missing a payment.”