Growth in Africa’s MVNO Market: Key Drivers and Strategies for Sustained Success
The Mobile Virtual Network Operator (MVNO) market in Africa is experiencing growth, with the industry’s penetration steadily increasing across the continent. In South Africa alone, the number of MVNO SIMs in use surged to 4.3 million in 2023, marking a remarkable 51% increase compared to the previous year. The South African MVNO market is now valued at R4.3 billion, with projections suggesting the number of SIMs could reach 10 million by 2028. This expansion is not isolated to South Africa; the entire African continent is witnessing a similar upward trajectory. As of 2022, Africa contributed 7 million MVNO subscriptions to the global market, accounting for 5.4% of the total, and countries like Senegal have seen MVNO penetration levels as high as 14%.
The future of MVNOs in Africa looks promising, with the market expected to grow at a compound annual growth rate (CAGR) of 6.75% from now to 2028, reaching a projected size of US$91.68 billion. This rapid growth highlights the critical need for dedicated platforms, such as MVNO Nation Africa, that foster connections and support the development of the MVNO ecosystem across the region.
This TechTalk Thursday article briefly highlights why MVNOs are gaining such traction in Africa and ways to sustain growth.
Why MVNOs Are Gaining Popularity in Africa?
MVNOs have rapidly gained traction in Africa, primarily due to their ability to leverage existing wireless network infrastructure by purchasing network capacity from Mobile Network Operators (MNOs). This business model, which allows MVNOs to pass down cost savings to consumers, has propelled them to the forefront of the telecommunications industry. In a conversation Akim Benamara, our Founder & Chief Editor, had with Andre Wills, Managing Director of Africa Analysis team, at the MVNO Nation Africa 2024 in Cape town, he emphasized that;
“This is the age of the MVNO in South Africa and the rest of Africa. What the MVNO offers to consumers and governments, particularly those looking to drive deeper penetration, is an opportunity to exploit the power of the MVNO model to bring connectivity to a greater audience across African markets.” – Andre Wills, Managing Director, Africa Analysis Team
One of the primary drivers is the entry of vertical markets, such as financial institutions and retailers, into the MVNO space. These entities are increasingly leveraging MVNO platforms to enhance their digital offerings, enabling them to provide tailored mobile services that complement their core businesses. By doing so, they can offer integrated solutions that meet the evolving needs of their customers, driving further growth in the MVNO sector.
In addition to vertical markets, the growing demand for data and digital services across the continent is a significant factor propelling the popularity of MVNOs. Africa’s tech-savvy consumer base, which is rapidly expanding, is constantly on the lookout for affordable data packages that can support their increasing digital consumption. MVNOs, with their ability to offer competitive pricing and flexible service plans, are well-positioned to meet this demand. Their offerings cater to consumers who prioritize both cost-effectiveness and access to reliable digital services, making them an appealing alternative to traditional mobile network operators.
The flexibility and innovation offered by MVNOs contribute to their growing popularity. Unlike traditional MNOs, MVNOs can quickly adapt to market demands, introducing new services and features that cater to specific consumer needs. This agility allows them to capture niche markets and offer customized experiences that larger operators may overlook.
Moreover, the regulatory environment in Africa is becoming increasingly supportive of MVNOs, with governments recognizing their role in enhancing competition and driving down prices. This regulatory support is crucial in markets like South Africa and Nigeria, where the telecommunications industry is highly competitive and dynamic. In Nigeria, about 43 MVNOS have been granted licenses, though ten months after obtaining them, they have yet to tap into the global MVNO market, which we hope they will.
The success of MVNOs in Africa can also be attributed to their ability to partner with large retail brands, which helps them to expand their reach and brand recognition. As projections suggest, the inclusion of these brands could push the number of MVNO SIMs in South Africa to 13.5 million by 2028.
Key Strategies for Ensuring Growth and Sustainability for MVNOs in Africa
For MVNOs to ensure growth and sustainability in Africa, they must focus on deepening their understanding of the market. This means going beyond basic consumer needs and delving into regional trends, regulatory landscapes, and technological advancements. By staying agile and continually researching their target markets, MVNOs can tailor their services to meet the specific demands of diverse consumer segments, ensuring they stay relevant and competitive in a rapidly changing environment.
Another critical factor for growth is the fostering of strategic partnerships. Collaborating with established brands, particularly those outside the traditional telecom sector, can significantly expand MVNO’s reach and credibility. For instance, partnerships with financial institutions or large retail chains can help MVNOs tap into new customer bases and offer integrated services that add value beyond basic connectivity.
Innovation is also crucial for the long-term success of MVNOs. To remain competitive, MVNOs must continuously evolve their product offerings, introducing new features and services that address emerging consumer needs. This could include offering bundled services, flexible data plans, or value-added services like mobile wallets and entertainment platforms. By staying ahead of the curve in terms of innovation, MVNOs can differentiate themselves from competitors and attract a loyal customer base.
“It used to be that MVNOs were seen as just a different brand or a slightly different market segment, but that’s not the case anymore. Those MVNOs who will succeed have to create their own type of solution, custom-tailored to their market segment and customer group. They must build and integrate. That is why we strongly emphasize the ability of MVNOs to combine different components from us and our technology partners and create something on their own with low-code AI to create something that truly delivers value to their target customer group.” – Andriy Zhylenko, CEO, PortaOne
Maintaining a strong focus on customer experience is vital. In a market where consumers have multiple options, providing exceptional service can be a key differentiator. MVNOs should invest in customer support, ensuring that any issues are resolved quickly and efficiently. Additionally, leveraging data analytics to gain insights into customer behavior can help MVNOs personalize their offerings, leading to higher satisfaction and retention rates.
Lastly, MVNOs must ensure they have a solid financial model that supports sustainable growth. This involves managing operational costs effectively, optimizing pricing strategies, and ensuring that revenue streams are diversified. By balancing cost-efficiency with innovation and customer-centricity, MVNOs can build a resilient business model that can withstand market fluctuations and drive long-term success.
