Operational excellence and a focus on high-value niche segments provide hope for Africa’s failing MVNO environment


Despite the strong growth of mobile virtual network operators (MVNOs) globally, the majority of MVNO efforts in Africa to date have been unsuccessful despite happening in countries offering favourable market conditions and plentiful opportunities. That’s according to new insights from global IT market intelligence firm International Data Corporation (IDC), whose latest report shows that while the number of MVNOs has increased globally in recent years, the trend remains in its infancy in Africa, with the continent playing host to less than 1% of the world’s 1,000 MVNOs.

“The MVNO situation is different in Africa because of several challenges such as a lack of regulatory support, poor business models and strategies, low ARPUs, market saturation in some countries, fear of competition, and resistance from incumbent mobile telcos,” says Leonard Kore, a research analyst for telecommunications and media at IDC East Africa. “Despite this, opportunities do exist, and a number of MVNOs have been launched on the continent, especially in Kenya and South Africa. Fast-developing telecommunications markets such as South Africa, Kenya, Egypt, Nigeria, and Morocco exhibit high mobile penetration rates and oligopolistic market structures, necessitating the need for MVNOs that focus on niche market segments.”

IDC believes some of the key factors driving the potential for MVNO growth in Africa are the existence of strong local brands, low barriers to entry, decreasing interconnection rates, emerging niche segments and the ability to generate alternative revenue streams for host telcos. The rise of MVNOs across the continent is likely to bring a number of advantages, including greater competition. This will drive improved quality of service (QoS) levels courtesy of increased network infrastructure investments, increased innovation, improved customer experience, and competitive pricing in some markets.

“IDC is seeing a trend where subscribers in some African countries are seeking many value propositions from their operators, including mobile money services, low pricing, extended network coverage, 3G or 4G services, affordable data packages, and unlimited plans, among others,” says Kore. “We are now seeing customers purchasing dual-SIM phones to accommodate more than one operator. A multi-SIM environment lowers the cost of customer acquisition in a market where users rarely change operators; this provides hope for new MVNO entrants that offer the right services. The best example of this is in Kenya where Equitel, a new MVNO, is trying to challenge the status quo by offering thin SIM card technology.”

“The key opportunities for MVNOs looking to operate in Africa include mobile money, discount services, triple-play services, OTT and VAS, roaming solutions, and public WiFi,” continues Kore. “There will also be opportunities in the future for those offering M2M/IoT solutions. For MVNOs to take advantage, they need to leverage partnerships with strong local brands and distribution networks, negotiate the right wholesale agreement, ensure operational excellence and avoid sparking price wars. MVNOs should adapt to local market dynamics and needs, and aim to host and control in-house critical elements (e.g., business intelligence/analytics, customer relationship management, and the billing platform) as this will enable them to access vital customer and market information in a timely fashion. At the same time, regulators are also urged to create a supportive regulatory environment that will help position African countries as possible MVNO destinations.”

IDC’s report ‘The MVNO Opportunity in Africa’ (IDC #CEMA23487) provides an insight into the MVNO landscape in Africa. It assesses the key drivers and inhibitors of MVNO growth, while looking at the key opportunities for MVNOs in the future. The report also provides some key strategic recommendations for current and potential entrants in the MVNO ecosystem.

About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For more than 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world’s leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.

IDC in the Middle East, Africa, and Turkey

For the Middle East, Africa, and Turkey region, IDC retains a coordinated network of offices in Riyadh, Casablanca, Nairobi, Lagos, Johannesburg, and Istanbul, with a regional centre in Dubai. Our coverage couples local insight with an international perspective to provide a comprehensive understanding of markets in these dynamic regions. Our market intelligence services are unparalleled in depth, consistency, scope, and accuracy. IDC Middle East, Africa, and Turkey currently fields over 125 analysts, consultants, and conference associates across the region.

Source: IDC


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