FNB and Cell C – a mobile match made in heaven?

AUGUST 18,2014.

MYBROADBAND.

FNB is preparing to launch a mobile virtual network operator (MVNO) in South Africa in partnership with mobile operator Cell C.

 Rumours are rife that FNB is preparing to launch a mobile virtual network operator (MVNO) in South Africa in partnership with mobile operator Cell C. The move seems likely given Cell C’s desire to offer MVNO services and FNB’s numerous existing plays in the mobile space.

MVNOs – where third parties use an existing mobile operator’s infrastructure to sell their own mobile products and services – have proven both popular and successful in Asia, Europe and the US, but to date have achieved little traction in the South African market because the country’s largest mobile operators (MTN and Vodacom) have been reluctant to offer MVNO facilities and because South Africa’s first MVNO, Virgin Mobile, has achieved limited success since it launched in 2006.

However Cell C, which has faced an uphill battle winning market share from South Africa’s two biggest networks, has indicated its willingness to provide MVNO services and has previously said it is always looking to create partnerships with high-profile brands.

Cell C currently provides the infrastructure for Virgin Mobile, and will be doing likewise for Mr Price’s planned mobile play, Mr Price Mobile (MRP Mobile), which was announced this week. That will bring South Africa’s MVNO tally to two, but there’s no reason to think Cell C isn’t actively pursuing other suitors.

Virgin Mobile in turn powers Red Bull Mobile, the energy-drink branded mobile services that are offered under a brand licensee agreement. Cell C is the only operator that’s demonstrated an appetite for MVNO arrangements, perhaps unsurprisingly given its desire to dilute the market dominance enjoyed by rivals Vodacom and MTN and its need to recoup on the massive infrastructure investments it is making to its network to allay criticisms about network quality.

It’s these complaints about quality of service that may prove the biggest obstacle to Cell C signing up additional MVNO players. Despite aggressively bringing down prices – particularly in the prepaid space – Cell C has been dogged by consumer complaints about dropped calls and lack of coverage, which have affected the operator’s ability to woo customers into porting to its network even with its compelling packages and pricing.

Cell C also has yet to launch next-generation 4G mobile data services commercially – something Vodacom and MTN have been investing in heavily and promoting aggressively. However, this may prove less of an impediment than imagined in instances where MVNOs target lower LSMs or where compelling value-added services are bundled with traditional offerings like call time and data.

Meanwhile, FNB – which holds its own telecommunications licence – has a long history of focusing on the mobile space. It’s been offering data and voice-over-IP (VOIP) services to its customers via its FNB Connect platform for years and it was the first bank in South Africa to launch transactional mobile-banking applications.

The bank has also become one of the biggest distributors of mobile devices in South Africa in recent years by offering customers reduced rates on devices and allowing them to pay off the devices over 24 months without interest and sells vast quantities of airtime and data via its banking applications and online banking portal.

Arguably the next logical step is for FNB to offer conventional voice and data services to its consumers directly – something an MVNO agreement with Cell C would enable. Doing so would allow FNB to provide end-to-end mobile services to its customers, from selling physical devices to supplying voice and data and, potentially, providing additional over-the-top services, in addition to its existing apps, from which all of the above could be managed.

Neither Cell C nor FNB were willing to comment on the market’s speculation, saying only that announcements about any new products or services are only made when they are ready to go to market. Nonetheless, Cell C appears to be looking for MVNO suitors, and FNB makes for an excellent match.