South Africa’s MVNO success shows path for Nigeria’s idle licenses

South Africa’s mobile virtual network operator (MVNO) market has grown into an industry worth more than R8 billion, offering a glimpse of what Nigeria could achieve if its own virtual operators finally move from paper licenses to live networks.

Nigeria has issued 46 MVNO licenses since 2023, but only two are active, leaving more than 40 still waiting to launch. The contrast is increasingly shaping a debate among telecom executives and regulators about what Nigeria must change to unlock competition in Africa’s largest mobile market.

South Africa’s story shows how quickly the model can scale when wholesale access works. The country’s MVNO sector started in 2006 when Virgin Mobile launched services on infrastructure owned by Cell C. For years, growth remained modest. Momentum picked up after the 2022 spectrum auction conducted by the Independent Communications Authority of South Africa, which required larger operators to host MVNOs as part of their license conditions.

Read also: Findings show only two of 46 licensed MVNOs are active

Cell C responded by investing in a Virtual RAN platform that allows partners to reach about 28,000 towers without building their own infrastructure. The move turned wholesale access into a major revenue stream and helped accelerate adoption by banks, retailers and fintech companies offering branded mobile services.

The strategy is already showing results. In its first financial results after listing on the Johannesburg Stock Exchange in November 2025, Cell C said wholesale revenue rose 22.5 percent year-on-year to R840 million in the six months to Nov. 30. Subscribers connected through MVNO partners climbed nearly 30 percent to more than 5.1 million, helping lift the company’s total base to 8.6 million.

“Wholesale delivered continued strong growth, with revenue increasing by 22.5 percent, underpinned by sustained momentum in our MVNO business,” Jorge Mendes, the chief executive officer said in an earnings release, describing the strategy as central to scaling the company through partnerships.

The South African model works partly because barriers are low. Brands such as FNB Connect, Capitec Connect and Knect Mobile use their existing customer bases to sell mobile bundles linked to banking services, retail rewards or digital payments. The approach allows them to focus on customer relationships rather than network infrastructure.

Nigeria is trying to build a similar ecosystem, but the rollout has been slower. The Nigerian Communications Commission began issuing tiered MVNO licenses in April 2023, creating five categories ranging from simple resellers to operators with their own core networks. By early 2024, the regulator had approved 46 licenses and collected more than N8.6 billion in fees.

Yet the sector has barely moved beyond the starting line. Only Vitel Wireless and EmoSIM have launched services so far. Vitel, a Tier-3 operator, secured its own number series and went live after signing roaming and interconnection agreements with major operators including MTN Nigeria, while EmoSIM focuses on digital travel connectivity through eSIM technology.

Industry players say the main problem is the complexity of negotiating wholesale access with established mobile network operators. Without affordable airtime and capacity deals, smaller entrants struggle to build viable business models.

Chidi Ajuzie, director of USK Mobile, said expectations around MVNO licensing have often been unrealistic.

“Licenses are not cash cows. Too many people think that once you get a license, the money will start rolling in. The truth is, you must build infrastructure, study the market, and create services that meet consumer needs. Without that, many MVNOs will die out quickly,” Ajuzie stated.

Ajuzie said smaller operators, especially those in lower-tier license categories, face steep financial hurdles when trying to support capacity and technical operations.

Still, he sees opportunities if companies target specialized markets such as youth services, migrant workers or fintech integration, approaches that have worked in countries like South Africa and India.

“Half of us may launch, but only those with clear strategies will survive,” he said, predicting mergers and consolidation across the sector over the next few years.

Tony Emoekpere, president of the Association of Telecommunications Companies of Nigeria, said differentiation will be essential if new entrants want to stay relevant in a market already dominated by large operators.

“The MNOs already provide enterprise services, internet, and fintech. MVNOs must find gaps and focus on those,” Emoekpere said.

Read also: Half of Nigeria’s MVNOs may collapse in 5years, stakeholders warn

He pointed to Kenya’s M-Pesa as an example of how targeted services can reshape a market by focusing on underserved users. In Nigeria, he said, opportunities could include low-data packages for point-of-sale machines or services designed for rural communities that lack reliable connectivity.

“Something as simple as a low-data package for POS machines in rural areas could be a game-changer,” Emoekpere said.

Others warn that copying foreign business models without adapting them to local realities could backfire. Olusola Teniola, director at IPNX, said infrastructure gaps and geographic challenges in parts of Nigeria require a different approach.

“In some villages, people still travel by canoe or horse for hours to access basic services. If your business model doesn’t account for that, it will fail,” Teniola explained.

Teniola argued that MVNOs should prioritize the bottom of the pyramid where millions of Nigerians who lack reliable connectivity, rather than competing directly for urban smartphone users.

The director also warned that failure to strengthen local telecom companies could lead to more profits flowing abroad through foreign-owned operators, raising concerns around data sovereignty and domestic innovation.

Globally, the MVNO model has expanded steadily over the past two decades. After the early success of Virgin Mobile, major telecom operators in markets such as the United Kingdom began hosting multiple virtual brands across sectors including retail, utilities and diaspora services. The UK now has more than two dozen MVNOs, many built around strong distribution channels or existing customer communities. Some host networks have even launched their own “flanker” MVNO brands to compete in different segments.

Industry veterans say the most successful MVNOs often share three common strengths: an existing customer base, an established distribution network and a clear value proposition. Brands such as Tesco Mobile and Lycamobile, for example, built growth by leveraging supermarket outlets or diaspora-focused distribution channels, showing how non-telecom companies can thrive in the space.

Nigeria’s MVNO wave, however, is unfolding differently. Experts say the fundamentals for launching an MVNO remain universal. Operators need a clear business plan aligned with their license tier, strong wholesale agreements with host networks, reliable technical partners and effective distribution channels. Negotiating wholesale contracts is particularly crucial because poorly structured agreements can undermine the entire business model.

Beyond contracts, operators must also define a niche market early, whether that is financial services, diaspora communications, youth-focused data bundles or enterprise connectivity, while carefully managing branding, customer acquisition and capital spending. Even without owning infrastructure, MVNOs still face costs tied to technology platforms, marketing and operational systems.

Some telecom strategists have developed scorecards to assess whether a new MVNO is likely to succeed, ranking factors such as distribution strength, market niche, technical readiness and commercial partnerships. These frameworks aim to help operators measure their readiness before launching in a competitive environment like Nigeria’s.

For policymakers, the South African example remains a useful reference point. By tying spectrum access to wholesale obligations, regulators effectively created a functioning market for virtual operators. Nigeria’s framework currently relies more on private negotiations between MVNOs and host networks, which analysts say can slow progress.

Read also: MVNO growth, competition in focus at upcoming forum

The stakes are high. As of February 2026, Nigeria’s active mobile subscriptions grew to 184.6 million, with a teledensity of 85.16 percent, one of the largest digital markets in Africa. Even a modest expansion of MVNO participation could introduce new services, improve pricing and extend coverage to underserved areas.

For now, the sector remains largely dormant. But telecom executives say the opportunity is still intact, if infrastructure bottlenecks are addressed, wholesale access becomes easier and operators focus on niche services that match Nigeria’s realities.

Without those changes, industry insiders warn, many of the country’s licensed MVNOs may never make it beyond the starting line. With them, Nigeria could unlock a new layer of competition in its telecom industry and reshape how millions of people connect to digital services.