MVNOs - A yielding market
to soothe the blow of the black swan

South Africa’s economy has been hit hard, first by the downgrade to junk status and then by the devastating effects of the pandemic lockdown. But it’s not all doom and gloom, there is most definitely fertile ground for opportunity, if you know where to look.

Telecommunications industries are experiencing a surge in demand with businesses and organisations, especially in countries severely hit by the pandemic, needing their employees to work from home. What is becoming clear is that this is not merely a fleeting trend with regards to global lockdown regulations, it is with global tech companies like Twitter, announcing work from home a permanent fixture, and on the local front with Amazon’s expansion in South Africa heralded with the launch of 3000 remote customer service jobs. The increase in people working in this manner has led to a flood in demand for online video viewing, downloading, and communication through video conferencing, all of which is leading to increased network traffic and data usage. COVID-19 has opened the eyes of many to the demand for agile and flexible work styles and access to data is key to its success.

With this in mind, brands and businesses, who have a large and loyal client base could do well to focus on providing telecommunications services and products as a Mobile Virtual Network Operator, MVNO. A mobile virtual network operator is a telecommunications service provider that does not own the infrastructure over which it provides services to its customers, buts offers the services through a wholesale model. It is a relatively new model to South Africa, and one that has achieved and continues to achieve huge success globally.

CEO of MVN-X, South Africa’s leading Mobile Virtual Network Enabler (MVNE), Valde Ferradaz, has over 26 years’ global experience in telecommunications and understands how vital accessibility to data is for economic transformation, “The more access to data, the more buoyant and resilient the economy. The continued digitisation of the world means we are meeting more of our human needs via digital connectivity. We need data to connect with loved ones, to research job opportunities, to navigate a new city, to do our banking. Data, just like bread, water, rice – is the new, essential commodity.”

The recent Research and Markets global outlook report on the global MVNO market including impact analysis of COVID-19, released in May, projects that the market is expected to reach USD 122.41 billion by 2027 witnessing market growth at a CAGR rate of 8.4% in the forecast period of 2020 to 2027.  

This is due to a number of factors, mainly growing demand to access mobile applications, social media, and multimedia services. The declining prices of smartphones is contributing to accelerated subscriber penetration across the globe and is expected to further fuel the growth of the market. Ferradaz notes that, “The South African market is a relatively mature market with world class infrastructure supporting it. However not everyone has access to the same level of connectivity, while most people have access to sim cards many don’t have access to a smart phone. So there is definitely still space to revolutionise the market and create better reach especially within lower LSM communities, ensuring that everyone has access to the same quality of connectivity.”

In South Africa, noted successful players such as Mr. Price, FNB and Standard Bank have lead the way as MVNO providers, offering their client’s not only a vital service but great incentives to remain loyal to the brand. Yet other businesses and network providers have failed to catch on to the global trend as yet, meaning opportunities are ripe for the taking. MVN-X, who has been responsible for the success of two of those leaders, provides businesses with a fully customisable turnkey service. From financial viability modelling to full logistics and warehousing, Ferradaz states, “Some of the obstacles preventing entities from entering the telecommunications market is a technical skills gap and navigating the complicated field of billing systems as this generally falls outside the normal scope of their business model, we aid businesses in all these spheres providing them with all they require to get to market faster.”

Ferradaz’s unmitigated success with telecommunications in South America and the Pacific, in countries facing similar obstacles, is testament to his honed understanding of data as currency. His principle is simple: where access to basic resources such as rice, water, electricity and food is a daily struggle, tagging data access and rewards to these essential service points, mitigates one of the main barriers to connectivity. 

On expanding that reach, South Africa’s telecoms regulator, ICASA, has released its long awaited Radio Frequency Assignment Plan – signs that South Africa is ready to robustly

embrace the acceleration of digital transformation. A transition that many industry players view as imperative to moving South Africa’s telecoms forward. This looks to be the impetus the industry has been banking on. Ferradaz says, “The move is indeed a positive one, and can only benefit the industry as a whole and will open the doors for more international investment.” 

With news that France’s largest telecom group, Orange, is considering entering the South African market, according to CEO Stéphane Richard as reported by Reuters, and speculation flying that they intend to takeover Cell C, one of the few network providers geared for MVNO’s. It’s never been a more exciting time to enter the telecommunications market, which is promising news for the South African economy.

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