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There has been little MVNO activity in Africa to date, but there are signs that market is poised for growth. By Vaughan O’Grady

MVNOS IN AFRICA

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irtual operators have carved out a significant presence in many global mobile markets, but have yet to make their impact felt in Africa. However, there are indications that the market is poised for growth.in recent years a handful of virtual players, some mobile virtual network operators (MVnOs) in the traditional sense and others operator sub-brands or highly-targeted niche players, have come to market in Africa, one of the most high profile being set’Mobile, launched by footballer samuel eto’o in Cameroon late last year. And a number of markets are on the verge of opening up to MVnOs. but thesenew entrants, and those yet to come, have some major hurdles to overcome if they are to build successful African MVnO businesses. Leveraging established brands from other industries will be an important weapon, especially in countries where the low-cost market, traditionally the remit of the MVnO, is still fiercely contested by the mobile network operators themselves. African MVnOs also facechallenges when it comes to building the necessary scale, working with regulatory regimes, and finding a willing host network. nonetheless, analysts see potential in the market.

“MVnO set-up costs continue to fall, and African MVnOs can benefit from that as well as learning from the experience of success and failure in other markets,” says tim Heal, consultant with CsMG. “Mobile is often a greatchannel for brands to get closer to their customers. And outside of big brands, there are lots of different kinds of niches that MVnOs can fill. there are always going to be opportunities and always going to be people trying their hand.” Africa has seen very little MVnO activity to date, although some companies have dipped a toe in the water. According to wireless intelligence, of 812 operational MVnOsworldwide as of May 2012 just four were Africa-based. there were also five mobile operator subbrands that offer MVnO-like services. Cameroon’s set’Mobile, Virgin Mobile and Hello Mobile in south Africa, and kirene Mobile in senegal are arguably MVnOs as many established markets understand them, although the last is considered a sub-brand of host network Orange by local regulator the ArtP.blueline of Madagascar is more of an isP than a mobile provider, while toubatel of senegal is a closed user group. Launches are possible in the near future in egypt and Morocco, where regulators are

1,036 MVNOs and MNO sub-brands hosted by MNOs in May 2012
MVnOs (812)
526 166

MnO sub-brands (224)

4 10 106 73 n europe n Asia Pacific n usa/canada n americas n Middle east n africa 13 19 17 7 105

Source: Wireless Intelligence

considering awarding MVnO permits, but that still makes for a tiny market. And any activity may still be some way off, in part because there is little impetus for mobile network operators (MnOs) to drive the market. “Historically, MnOs are much more likely to look favourably at MVnOs where growth has tapered off or when they are under-indexing in keycustomer segments,” Heal says. Many markets in Africa are still in the rapid growth phase so, “there hasn’t necessarily been the appetite from operators in those markets to seriously consider the wholesale strategy,” adds Mike Greening, VP at CsMG. African regulators have not pushed the MVnO concept either. “Currently, the regulators are more interested in basic yet necessary regulations, such as siMcard registration and mobile number portability,” says kerem Arsal senior analyst, eMeA at Pyramid research. that said, he feels some regulators in the sub-saharan region will do “just about anything to promote competitiveness”, so MVnOs may yet be encouraged. but if would-be African MVnOs decide to take the plunge there are many factors they will need to consider. One of the biggest challenges is...