South Africa’s MVNO Market Surges to R4.3 Billion, Driving Telecommunications Diversity

South Africa's mobile virtual network operator (MVNO) market demonstrated notable economic significance in 2023, successfully reaching R4.3 billion in revenue. This burgeoning sector's vitality was captured in the latest report by Africa Analysis, which indicated not only strong current performance but also a promising future trajectory.

The dynamic South African MVNO landscape has seen a proliferation of new entrants, with nine brands launching in the past three years alone. With two more expected to debut by mid-2024, the market robustness is a testament to the competitive and diverse telecommunications landscape in the country.

The incumbent 17 MVNO players are predominantly hosted by Cell C and MTN, with Cell C taking a dominant position by hosting over 95% of the active SIMs. Key figures in the sector, such as Capitec Mobile and FNB Connect, each command over a million SIMs, influencing the market's course substantially.

The impressive growth rate of 51% year-on-year has propelled the number of MVNO SIMs to a staggering 4.3 million as of December 2023. This trajectory is not a mere flash in the pan, as analysts, including Africa Analysis director Andre Wills, foresee the continued upward trend, potentially reaching 10 million SIMs by December 2028. The projection even accounts for the influx of large retail brands, potentially driving the figure to an optimistic 13.5 million SIMs in the same timeframe.

The industry's upward momentum hinges on customer operations robustness, including crucial pre- and post-sales support to sustain growth and enhance satisfaction. This sentiment is also reflected in the views of senior consultants from TTEC, a customer experience technology and services company, who reinforced the importance of customer support alongside other strategic factors for the success of an MVNO.

While financial specifics for many South African MVNOs remain under wraps, there are indications of healthy economic performance. Former FNB Connect CEO Bradwin Roper unveiled the operator's standalone business profitability as of early 2022, while retailer Mr Price disclosed a R570 million revenue from its mobile division in just half a year, inclusive of device sales.

Given the sector’s evident potential and the right mix of customer focus, innovation, and strategic partnerships, the South African MVNO market is poised to significantly reshape the telecommunication landscape in the upcoming years.