MVNO Melon Mobile enters SA market

Melon Mobile, a mobile virtual network operator (MVNO) is launching its commercial operations in South Africa on Thursday.

The fully digital MVNO said it aims to disrupt the South African mobile industry, particularly in the pre-paid segment, by putting control and flexibility back into the hands of its consumers.

The company will piggyback off MTN South Africa's network and will offer a full range of connectivity solutions, including voice, data and text messages, the company said. It will use an app to facilitate most if not all interactions and tasks for customers.

An MVNO is a wireless communications services provider that does not have its own physical network infrastructure. Melon Mobile relies on another telecommunications company, MTN South Africa's network, to provide its services.

"What we have done differently is to focus on a purely digital journey. It's app-based, and most of the support, such as self-RICA, is done online. There is no physical paperwork or anything like that. We have tried to digitize the whole journey," said Melon Mobile Founder and CEO Calvin Collett.

Self-RICA is an online service that allows South Africans to activate their SIM cards.

"I think the most important thing to note is that we also have people in the background who offer support. So, the front-end is all digital to make sure you can support yourself, but if you can't, you can call a call center where actual people will assist," Collett added.

Regulator approval of MVNO telcos

Melon Mobile enters the country at a time when the Independent Communications Authority of South Africa (ICASA) is seeking to facilitate MVNOs' entry, as it tries to meet the growing and increasingly diverse needs of South African consumers.

In March 2022, the regulator included the launch of a mobile virtual network enablement platform (MVNE) as a requirement for the telecom spectrum license acquired by telecom operators.

The fully digital MVNO said it aims to disrupt the South African mobile industry. (Source: Image by Freepik)

For a long time, Cell C was the only mobile network operator that leased its network to MVNE operators in South Africa.

This prompted MTN and Telkom to lease their networks in 2020 and 2023, respectively. Vodacom followed suit and announced that it would welcome MVNOs onto its network in November 2022.

An increase in South African MVNOs

Melon Mobile's launch comes after South African bank Capitec launched its own MVNO service called Capitec Connect in September 2022, promising data that does not expire.

Melon Mobile said it is targeting 0.5% to 1% market share over the next five years. Collett added that the MVNO allows customers to build their own flexible mobile plans.

"We've built a service that puts the consumer first, giving them the freedom to choose their monthly data, voice and text needs, without locking them into anything. It's about flexibility, value and perhaps most importantly, simplicity," Collett explained.

Melon Mobile is not a prepaid or postpaid solution, it's a subscription. For example, customers can choose the subscription or package that they want and then they can change it at any time month-to-month, the CEO noted.

SA's mobile mix

There are numerous other local MVNO brands linked to retailers and other businesses that run off the Cell C network including me&you Mobile, Mr P Mobile, Sakeng Mobile and K'nect Mobile, to name just a few. Virgin Mobile South Africa closed its MVNO doors in 2021 after 15 years in the country.

At the end of 2020, Cell C reported more than 2 million subscribers through its MVNO partners and said the division contributed 7% of overall service revenue.

According to parent company First Rand's latest financial results, FNB Connect had around 878,000 active SIM cards on its network in 2022. Even though FNB is estimated to be the biggest MVNO in South Africa, it is still very small compared to traditional mobile operators.

According to statistics from Omdia, a sister company of Connecting Africa, SA's biggest operator, Vodacom, had 51.8 million users at the end of the fourth quarter of 2022.

MTN had about 36.5 million customers, Telkom South Africa had 18.5 million and Cell C had 13 million users. Data-only network Rain doesn't publish subscriber numbers but is estimated to have under 1 million users on its network.

*Top image source: Melon Mobile Website.

— Matshepo Sehloho, Associate Editor, Connecting Africa