Retail MVNOs collectively account for less than 20% of MVNO SIMs and remain well behind banking-led operators. South Africa’s mobile virtual network operator (MVNO) market has entered a new phase of development, evolving from a niche telecommunications segment into a strategic customer engagement platform for banks, retailers, insurers and digital businesses.This is according to the newly-released 2026 South Africa MVNO Market Outlook Report by Africa Analysis.The report identifies banking MVNOs as the primary driver of market expansion. It notes that Capitec Connect reached approximately 1.9 million subscribers by the end of 2025, accounting for around 41% of South Africa’s MVNO market.Other major banking-led operators, including FNB Connect, Standard Bank Mobile and Nedbank Connect, are increasingly using connectivity to deepen customer relationships, improve loyalty and support broader digital ecosystem strategies, says Africa Analysis.“The South African MVNO market has entered a fundamentally different phase of development,” says Andre Wills, managing director of Africa Analysis.“We are seeing connectivity embedded into broader customer ecosystems where the primary objective is no longer selling airtime, but improving customer engagement, loyalty and retention. This represents the emergence of the MVNO 3.0 model.”The report highlights the emergence of MVNO 3.0 – a new generation of operators using mobile connectivity to improve customer retention, increase digital engagement and enhance customer lifetime value.Under this model, connectivity becomes an embedded service within broader banking, retail, insurance and digital ecosystems, rather than operating as a standalone telecommunications product.Despite strong momentum, South Africa’s MVNO market remains underpenetrated compared to more mature international markets at a similar stage of development, says Africa Analysis.It explains that this gap suggests considerable headroom for future growth as digital ecosystems expand and additional brands enter the market.The report identifies eSIM technology as a key catalyst for the next phase of MVNO development.It states that approximately 59% of South African MVNOs either already support eSIM or have announced plans to introduce it. By removing the need for physical SIM cards, eSIM enables fully digital customer acquisition, lowers distribution costs and reduces barriers to market entry.Africa Analysis forecasts that South Africa’s MVNO market will reach approximately 14.4 million MVNO SIMs by 2030, representing 12.5% of the retail mobile market.According to Dobek Pater, telecoms analyst at Africa Analysis, the growth of MVNOs is being driven less by traditional price competition and increasingly by how operators integrate connectivity into broader customer value propositions.“One of the key factors driving growth in the MVNO market is the integration of telecoms products and services into broader customer ecosystems,” says Pater.“In sectors such as banking and retail, customers are increasingly rewarded across multiple product categories. Spending in one area can unlock benefits in another, creating stronger engagement and loyalty.”Pater notes that banks have emerged as the strongest performers in the segment.“To date, the banking sector in particular has been highly-successful in using MVNOs to deliver greater value to customers and position telecoms services as a retention strategy,” he explains.Beyond customer strategy, the mechanics of launching and operating an MVNO have also become easier.“The market has become more accessible through cloud-hosted backend systems and the growing number of mobile virtual network enablers (MVNEs), which allow operators to outsource functions such as subscriber management and billing,” says Pater.According to Pater, ICASA’s conditions attached to high-demand spectrum allocation have expanded the MVNO ecosystem.“Operators that acquired spectrum during the auction process were required to host MVNOs on their network infrastructure. While Cell C has been active in MVNO hosting for approximately two decades, MTN and Vodacom have since entered this space as well.”He says the result has been increased competition at the wholesale infrastructure layer.“This has given MVNOs more choice in selecting network partners and introduced competition among host operators. Some MVNOs are also using more than one network to improve coverage quality and ensure uninterrupted connectivity.“eSIM enablement is beginning to influence MVNO expansion and will become increasingly important going forward, particularly as it removes barriers linked to physical SIM distribution and enables more seamless digital onboarding.”Compared to traditional mobile network operators (MNOs), MVNOs enjoy structural advantages that make market entry and innovation easier, Pater says.“A major advantage is lower capital investment and generally lower operating costs because MVNOs do not build their own networks, invest less in backend systems and do not acquire spectrum.”He notes, however, that this is partially offset by wholesale costs paid to MNOs and MVNEs.MVNOs are also positioned to move faster in developing niche propositions. “They can offer more flexible and targeted products and integrate telecoms services into broader ecosystems, such as banking and retail, increasing customer value.”At the same time, traditional operators are adapting, he adds. “MNOs are increasingly expanding into fintech, mobile money and financial services, while also launching sub-brands aimed at serving specific customer segments.“Retail MVNOs collectively account for less than 20% of MVNO SIMs and remain well behind banking-led operators,” Pater says.“However, they are increasingly embedding mobile offerings into loyalty and rewards programmes and have significant advantages through their existing customer bases and distribution networks.”Among retail-led operators, he identifies Mr Price Mobile as the standout performer.