Shaken or stirred? A white whale that in 2019 was thought to be a Russian spy was found shot dead in Norway last week, fueling rumours of foul play and all kinds of blubber-O-7 shenanigans.

In this Open Letter:

• Smart cuts: Slicing up SA's R200bn+ telecoms market.

• SA’s 2-pot hits the streets, how to VC & Gumtree killing scammers’ game.

• Join live today: Scaling your business in SA — pro insights.

• The most practical use cases for AI: The results are in.

• Startup fuel: Share this 10 times and get Pro membership.

TRENDING NOW

A Play for SA’s R200bn+ Mobile Game

Back in 1994, South Africa received cellular services for the first time courtesy of Vodacom and MTN… joined by Cell C (2001) and Telkom Mobile/8ta (2010).

Together, these 4 networks are the primary Mobile Network Operators (MNO) by SA mobile market share:

• Vodacom (43.8%)

• MTN (32.0%)

• Telkom (16.9%)

• Cell C (7.3%)

And being a Mobile Network Operator (MNO) is a very specific gig – you manage and maintain the infrastructure (towers) and manage access across a massive geographical area (in exchange for a slice of the pie from anyone who wants to make use of it).

But it has its limitations: For starters, these MNOs’ systems are 20+ years old, limiting their ability to serve the ever-evolving user needs of SA’s 112.7 million mobile connections, each spending on average R100-R500 per month on phone services (jip, that’s R11.2bn–R56.3bn every single month!).

Easy money

In the past, keeping SA mobile users happy was simple:

• Create a series of stock-standard packages

• And push new mobile phone upgrades (every 2 years)

The mobile big 4 didn’t have to bother too much with user experience and customisability – airtime is airtime – allowing them to focus on maintaining the network: operations, staffing and overhead costs they could neatly pass onto the consumer.

A premature revolution

Some caught onto the gig, though.

As early as 2006, South Africa got its first MVNO (Mobile Virtual Network Operator) when Virgin Mobile SA launched on Cell C’s network.

An MVNO being a brand that leases space on the network from an MNO, freeing it from those heavy network maintenance costs and allowing it to focus solely on providing superior products and customer service.

But it didn’t go so well… we all know Virgin Mobile is gone now. In fact, out of the 40 MNVOs launched in SA over the last 18 years, only 19 are currently in operation – and these are mainly value-add services from banks, grocery retailers, fashion retailers, insurers and ISPs.

SA was struggling to get its MVNO game off the ground.

In fact, the total MVNO market was completely stagnant at less than R2bn per year (just 2% of SA’s mobile retail market) for 4 years between 2019 and 2022.

But then it all changed…

The Big MVNO Surge

Last year (2023), the MVNO market literally doubled to R4.3 billion, with some predictions for growth for 2024 to 2029 so ludicrous, we dare not repeat it here.

Why? Well, it could be that SA’s big data costs debate has finally just caught up. Or perhaps South Africans just want more flexibility and better user experiences.

One trend is that we’re no longer buying every new model of phone (and therefore not upgrading as often), likely due to:

• Small, incremental phone upgrades mean you can skip a model or two.

• Rising costs drive users to wait an extra year or two before upgrading.

• Phones are becoming hardier, so they last longer (not Nokia 3310 levels yet, but better).

Either way, there’s a lot of opportunity up for grabs in the MVNO space, and you can bet that’s just what some innovative SA startups are doing…

Melon Mobile

Melon Mobile is a local MVNO launched in April 2023 and is one of only a handful of “pure telecoms” MVNOs in SA – unlike MVNOs that offer telecoms services as an add-on to an established industry (retail, banking etc.) Melon is just in it to improve SA comms.

And it shows as they recently introduced SA’s first, a 14-day free trial of their customisable network and flexible offering.

Users are also able to customise a mobile plan to suit their needs – picking as much, or as little mobile data, call minutes and SMSs as they need. Or if you don’t know where to start, pick one of their pre-configured plans (with unlimited voice calls and SMSs) – all on a month-to-month basis so you’re not locked in for 2–3 years.  

And we mean customisable: Their Family Plans lets you add up to 7 people to one account, and build a unique month-to-month plan for each family member.

What’s more, they’re Africa’s first fully digital MVNO – even their eSIM is 100% digital and already embedded in some Apple and Android phones.

This week, Melon’s founder and CEO Calvin Collett is on the podcast to tell us about the triumphs and challenges of launching fully digital, their disruptive billboards, and how Starlink can add to SA’s telecoms mix…

With SA’s MVNO industry coming on in leaps and bounds, and local players like Melon Mobile offering innovative solutions that shake things up, we’re watching this space…

Podcast Highlights:

• Moving with the major shifts in mobile technology.

• MVNOs, MVNEs, and Melon’s hard road to build a fully customisable network.

• Understanding your customer, Melon’s “risky” 14-day trial, and shaping Melon’s ideal customer.

IN SHORT

💰 How to VC. The 6th edition of CatalyzU’s Venture Capital Fellowship Cohort is open for applications. Running from 1 October to 12 November 2024, the fellowship aims to equip aspiring venture capitalists with critical skills, knowledge, and connections in the African tech ecosystem.

📺 X gon show it to ya. X has just launched a beta version of its TV app on several app stores as the company pushes into a “video-first platform” to attract more advertisers, creators and partners.

🚰 Everything and the kitchen sink. Shoprite Holdings is selling off its furniture units, ‘House & Home’ and ‘Ok Furniture’, to Pepkor for around R3 billion offering to focus on its specialist clothing, baby, outdoor, and pet stores.

🧼 DStv’s shiny new app. The DStv Stream app is getting a facelift with new capabilities and features as MultiChoice drops the price of its Premium bouquet by a whole R100 — as long as you commit to a 12-month contract.

🦺 Scamless Gumtree. South Africa’s online classifieds site, Gumtree has just launched Pay & Ship, a secure payment and delivery solution for shopping on its site by partnering with digital escrow service TradeSafe, to process payments, and Pargo to handle deliveries.

🍯 Dipping into the pot. SA’s two-pot retirement system came into play on Monday with retirement administrators flooded with withdrawal requests, and many having to place holding messages on their websites warning of high traffic volumes to their sites.

😎 The Stack. Founders need tools and suppliers they can trust. Check out our Founder’s Stack with easy no-code automation with Make and unlimited content to build your brand and authority with Stream.

CHECK THIS OUT

At 12:00 PM today (Friday, 6 September), we’re hosting the startup strategy pros from Metavolve on LinkedIn Live for a session on what it takes to scale like a legend. And, guess what? This one’s free and open to anyone — sign up here.

Engage SA’s Most Vibrant Startup Community

Want to unlock valuable opportunities on tap?

In the last 48 hours alone, in our online community, we…

• Got our members invites to an exclusive founder’s event in CT.

• Discussed at length the potential of a pipeline-filling speed-dating event with founders and customers.

• Ran the world’s most polarised poll on how much rest founders get 😬.

• Discovered the ultimate anti-self-sabotage must-read.

• Thoroughly unpacked luck, management and Paul Graham’s founder mode — including that Kanye probably coined it first YHTBT 🤣.

Coming Up Next Week

• Wednesday 10-11: Office Hours, where we all log in and work together, + the whole Open Letter team is at members’ disposal.

• New: Free monthly startup strategy calls for all pro members.

• Support: All day, every day: unlimited introductions, recruitment, service provider referrals and business-building insights.

What You Said…

We asked where you see the most practical use cases for AI, and it’s in streamlining processes…

🟨🟨🟨⬜️⬜️⬜️ ✍🏽 Helping me write documents for work (18%)

🟨🟨⬜️⬜️⬜️⬜️ 🔎 Replacing my search engine (for research purposes) (15%)

🟨⬜️⬜️⬜️⬜️⬜️ 👩🏽‍💻 Write code for me (8%)

🟨🟨⬜️⬜️⬜️⬜️ 🎥 Content creation (both text, image and video) (15%)

🟩🟩🟩🟩🟩🟩 📈 Business optimisation and cost reduction (36%)

🟨⬜️⬜️⬜️⬜️⬜️ 🧸 Lol, AI is a toy (8%)

Your 2 cents…

For sure, Bzaar. You’ll probably have cheap AI-gen art in the future, and then proper valuable human content to offset it. 🎨🖌️

Right on the money, William! It’s been a game-changer for producing fast, basic scripts and automation for us. 🐒