MVNOs Driving South Africa’s Mobile Market Growth: A New Era of Competition and Innovation

South Africa’s Mobile Virtual Network Operators (MVNOs) are increasingly becoming a dominant force in the country’s mobile industry. The latest MVNO report from BMIT, a renowned research and advisory firm, highlights the rapid growth of MVNOs in South Africa and their role in the mobile market expansion.

The Rapid Growth of MVNO Subscribers

According to the report, MVNO subscribers in South Africa have surged from just over 2.5 million in 2022 to nearly 5 million subscribers today. This figure is set to continue growing, with forecasts predicting that the number of MVNO users will reach 11 million to 12 million by 2029. This represents a compound annual growth rate (CAGR) of 18%, outpacing the traditional mobile operator market’s growth.

Johan Nel, the lead author of the report, attributes this impressive growth to the increasing adoption of MVNOs, particularly from banks and financial institutions such as FNB and Capitec, which have entered the MVNO market with strong offerings targeting financial services. These MVNOs are attracting a higher-quality customer base, which is set to drive revenue growth.

Cell C’s Continued Market Dominance

The report also identifies Cell C as the leading player in the MVNO market, both in terms of subscriber base and innovation. With the introduction of initiatives such as its Multi-Operator Core Network (MOCN), Cell C is solidifying its role in the MVNO landscape and continuing to drive competition within the industry.

The entry of major players such as Telkom and Vodacom into the MVNO wholesale service market is intensifying competition and further propelling the market’s expansion. Many of the 23 existing MVNOs in South Africa have either switched operators or adopted a multi-operator strategy, underlining the growing complexity and potential of the MVNO sector.

The Role of eSIMs and Customer-Centric Models

Embedded SIMs (eSIMs) are emerging as a key technology to drive market growth. By eliminating the need for physical SIM cards, eSIMs streamline service activation, lower distribution costs, and enable users to quickly adopt new services. This innovation is expected to be a game-changer for MVNOs in South Africa as they scale their businesses and attract new customers.

Moreover, MVNOs are shifting their focus from mere subscriber numbers to sustainable business models that prioritize customer retention. This includes building strong relationships with existing customers and creating value-added services that appeal to diverse market segments.

Shifting Focus: ARPU and Sustainable Growth

An important trend identified in the report is the increased focus on Average Revenue Per User (ARPU). The growth of bank-centric, retail-centric, and Internet Service Provider (ISP)-centric MVNOs is contributing to a rise in ARPU, with more users switching from traditional mobile networks. As MVNOs continue to cater to niche segments, including small and medium enterprises (SMEs), the average value of each subscriber is expected to increase, which will further drive revenue growth.

Christopher Geerdts, Managing Director of BMIT, believes that while MVNOs are fierce competitors to traditional mobile operators, they also offer strategic partnerships that help leverage existing network infrastructure. This symbiotic relationship between MVNOs and mobile operators is fostering a more dynamic and competitive market that benefits consumers with greater choices, better service, and competitive pricing.

A Promising Future for MVNOs in South Africa

The MVNO market in South Africa is poised for significant growth in the coming years. As more financial institutions, retailers, and tech companies embrace the MVNO business model, the mobile industry is set to experience greater innovation, improved customer experiences, and enhanced market competition. The focus on eSIM technology, higher ARPU, and sustainable growth strategies will ensure that MVNOs continue to play a pivotal role in shaping the future of South Africa’s mobile market.

By embracing these trends, MVNOs are no longer just disruptive players but are becoming integral to the development of the country’s mobile infrastructure and services.