South Africa’s new fully digital mobile virtual network operator (MVNO), Melon Mobile, backed by MTN, hopes to disrupt the prepaid industry by offering custom made flexible plans.
In May, it will introduce an eSIM option, making it the second mobile operator in the country to do so in the prepaid sector, after Telkom Mobile.
Melon is Africa’s “first truly digital MVNO” because its service is managed entirely through an app and website, chief executive Calvin Collett said.
chief executive Calvin Collett
“To buy a SIM, one simply needs to download the app, register, and order your SIM. No stores, no contracts, no packages and you can even self-RICA via the app with your ID book or card,” he said. “In short, what differentiates us is simplicity, configurability and control.”
The Melon Mobile app is available on Android and iOS and has a 30-day free trial that includes 1GB of data, 100 voice minutes and 100 texts.
Afterwards, you can either select Melon-made plans or build-your-own, which lets you choose allocations and combinations for data, voice and texts.
Melon is targeting the middle-tier market, namely tech savvy people aged 18 to 45.
“We are aware of the fact that the bottom end is price sensitive while the top end is service sensitive so we are aiming for the mid-tier who want a decent price and great service,” said Collett.
The monthly plans offer flexibility to choose more or less allocation as required each month, but data, voice or text bundles won’t expire as long as customers have a paid up valid subscription in place.
Collett said Melon took a critical look at the mobile industry and found solutions to everything it did not like.
“We nitpicked every detail, finessed the user interface, and redesigned the user experience, until we got it just right. We didn’t digitise just for the sake of being digital. We put everything together to build a better experience for the consumer,” he said.
Melon Mobile will piggyback on the MTN network for complete coverage, including 5G connectivity, but will not make use of its call centres or procedures.
“We have a full contact centre so that when you communicate with us via calls, WhatsApp, Facebook Messenger, Google Messenger, you will end up talking to a Melon call centre agent and not a bot — for now at least,” said Collett.
South Africa may not have a good track record with mobile virtual network operators — Virgin Mobile shut down after operating for 15 years— but Collett said Melon’s focus was to create “real value and differentiating factors
He added: “Post the pandemic, consumers have become far more accustomed to ordering and doing things online versus going into a store.”
Melon Mobile is the third mobile virtual network operator to piggyback on MTN, after PnP Mobile and Afrihost Air Mobile. Other networks piggybacking on the Cell C network are Capitec, FNB, Standard Bank, Mr Price and Shoprite.
Melon Mobile may be limited to smartphones due to its app access, but South Africa has “an incredibly high uptake on smartphones with some of them costing under R400”, Collett said.
Melon’s eSIM option is expected to launch at the end of May and installation will be directly on the device, instead of scanning a QR Code.
“In terms of wearables, we will launch this at the same time as our primary eSIM offering. Customers will be able to do a SIM swap from physical SIM to eSIM at no cost,” said Collett.
The differentiators that Melon has focused on such as going fully digital, being flexible and focusing on customer service are all good for consumers, said Christopher Geerdts, managing director of technology research firm BMIT.
“These are precisely the features that their target base [digital-savvy customers] want,” Geerdts said.
The mobile virtual network operators doing well are “big brand” ones such as banks and retailers because they can tap into their existing customer base, build on their loyalty programs and leverage their brands, he said.
“Melon will have to work hard to establish themselves as a brand, in a market historically driven by brand, and if they don’t have a large marketing budget then they will need to achieve growth by having a sufficiently strong digital proposition and build a reputation for customer service,” Geerdts said.
There has been a major shift in data usage and data-focused internet service providers such as Afrihost who have done well by building into that, he added. “If Melon Mobile can tap into the market which is ‘data first’ in their consumption priorities — but needs voice and SMS from time to time — then this will work in their favour, when competing with voice-centric offers in the market.”
According to BMIT’s 2022 MVNO report, there is a combination of fundamental shifts happening rapidly in the mobile, retail, banking, IT and media sectors. The mobile virtual network operator market is sitting at an inflection point and will be an integral part of new, digitally driven, competitive frontiers across the traditional mobile industry boundaries, it said.
Mobile virtual network operators still only represent a relatively thin slice of the market, but the entry of large, mass-market players is significant, said Geerdts, citing the report. “There is strong potential for growth by MVNOs and we see them potentially doubling their mobile services market share in the next two to three years. In the long run, we expect them to include 10 to 12% of subscriber numbers.
“Trends we have seen with MVNOs are to leverage consumer brands and to use mobile as part of a converged offering — usually with financial services, where the collective revenue from each customer is not airtime-specific but comes from a mixture of mobile, financial and converged services.
“There is strong competition overall and the MNOs are formidable competitions in the market, but consumers in Melon’s target market could benefit from an MVNO that has taken a lot of time to understand their digital-centric lifestyles, as long as they are able to offer exceptional customer service,” Geerdts added.