Huge opportunities for greater
and more affordable connectivity

MVN-X CEO, Valde Ferradaz spoke to Moneyweb about how data has become an essential need for all of us, how the Work from Home culture has become our new normal, and what it means for businesses in this economic climate.

The strict lockdown enforced at the end of March in SA has accelerated the digitalisation of the workplace much faster than most business leaders would ever have thought possible, says MVN-X CEO Valde Ferradaz.

The subsequent surge in the demand for data impacted the ability of mobile networks to keep up. The use of digital platforms such as Zoom and Microsoft Teams exploded – replacing face-to-face interaction. And it all required data.

The Independent Communications Authority of South Africa (Icasa) issued regulations in April that allow for the temporary release of high demand spectrum during the National State of Disaster to “ease network congestion, maintain a good quality of broadband services, and enable licensees to lower the cost of access to consumers”.

The regulator acknowledges that the release of high demand spectrum has become critical as it is one of the key interventions to stimulate economic recovery. It is also cognisant of the fact that the emergency release of the spectrum should neither delay nor undermine processes to license the spectrum permanently.

The telecommunications market in SA is relatively mature with most people having access to connectivity, albeit not at the same level. “The ultimate goal is for everyone to have the same level of connectivity that is simple, accessible and affordable,” says Ferradaz.

Covid-19 has brought the urgency and the need for a far more open telecommunications market to the forefront.

“Data has become an essential commodity,” says Ferradaz.

“All our daily needs, whether it is being able to earn an income, to be educated, search for information or to do financial transactions are being digitised.

“Without sufficient data, people are deprived of their essential needs and in the process economic growth is choked.”

This is where players like MVN-X become important …

The business acts as an enabler to establish mobile virtual network operators (MVNOs), which allows for faster and more affordable access to data and a multitude of product-specific offerings.

An MVNO is a wireless or virtual communications provider that does not own the wireless network infrastructure over which it provides services. They offer their customers mobile connectivity through the services they provide.

MVN-X has already enabled large brands such as Standard Bank and Mr Price to establish their own MVNOs. Ferradaz says more commercial banks and large retailers are poised to do the same. It is all about the battle for the share of the consumer’s purse. As the economy shrinks, the share of that wallet becomes all the more important for brand leaders.

The function of mobile virtual network operators is to converge services that allow their customers to buy airtime and data, pay their bills, draw or deposit cash, fill up with fuel and buy groceries or clothes.

The end-game is to reward them for their loyalty and create greater “customer stickiness” through connectivity and converged offerings at affordable prices, says Ferradaz.

However, the enabling technology can be a barrier. The MVNOs need a technology platform that will allow them to bulk-buy data from airtime network operators and package it competitively. “This becomes complicated and requires expertise that, for retailers or banks, falls outside of their core business model,” explains Ferradaz.

The main challenge to businesses entering the market is the lack of understanding of the business of being a telecommunication service provider. They often lack the skills, the ability to charge their customers and to price their packages. “If businesses are not innovative enough and do not fully embrace the concept of convergence, they will fail.”

To be a successful MVNO a brand has to have the geographical reach, a large recurring customer base and distribution capabilities to reach their customers.

“We map out the commercial viability, strategic planning, profitability analysis and we do the business modelling. We enable businesses to become an end-to-end telecommunication service provider.”

MVN-X guides large enterprises in breaking from the conventional way of thinking about their business as simply a trading platform. “They can enrich their customer’s lifestyle by building a business model that will bring value to the customer while ensuring their share of the customer’s wallet – by enabling them to connect their customers through connectivity.”

Governments and regulators play a pivotal role in the expansion and future success of mobile and broadband telecommunications markets.

Currently, the biggest constraint to the expansion of the South African market is the release of spectrum. Radio spectrum is used to carry information wirelessly for many vital services.

Spectrum – a ‘precious national resource’

According to the GSM Association, which represents the interests of mobile operators worldwide, demand for this “precious national resource” is so great that regulators should take great care to ensure it is used as efficiently as possible.

Ferradaz says the release of the spectrum has huge revenue generation potential for the South African government. However, the procurement process has to be fair and incorruptible. The conditionality for obtaining spectrum must be transparent.

According to Ferradaz, government’s role is critical to ensure that consumers are protected, the economy is supported, and legislation is in place to allow the wholesaling of data and voice to open the market to more players. 

MONEYWEB:

Amanda Visser 29 Jul 2020 

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