South Africa's mobile virtual network operator (MVNO) market has grown into an industry worth more than R8 billion, showing what Nigeria could achieve if its own virtual operators finally move from paper licenses to live networks.
Nigeria has issued 46 MVNO licenses by 2023, but only two are active, while more than 40 are still waiting to be launched. This paradox is increasingly shaping a debate among telecoms executives and regulators over what changes Nigeria should make to unlock competition in Africa's largest mobile market.
The South African story shows how quickly the model can scale when wholesale access works. The country's MVNO sector began in 2006 when Virgin Mobile launched services on Cell C-owned infrastructure. For years, development remained modest. The momentum gained momentum following the 2022 spectrum auction conducted by the Independent Communications Authority of South Africa, which required larger operators to host MVNOs under their license terms.
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Cell C responded by investing in a virtual RAN platform that allows partners to access approximately 28,000 towers without building their own infrastructure. The move turned wholesale access into a major revenue source 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 per cent year-on-year to R840 million in the six months to November 30. Customers connected through MVNO partners grew by nearly 30 percent to more than 5.1 million, taking the company's total base to 8.6 million.
“Continued strong growth in wholesale, with revenue up 22.5 percent, based on continued momentum in our MVNO business,” Chief Executive Officer Jorge Mendes said in an earnings release, calling the strategy central to growing the company through partnerships.
The South African model works partly because the barriers are lower. Brands such as FNB Connect, Capitec Connect and Connect Mobile use their existing customer base to sell mobile bundles linked to banking services, retail rewards or digital payments. This approach allows them to focus on customer relationships rather than network infrastructure.
Nigeria is trying to create a similar ecosystem, but implementation has been slow. 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 over N8.6 billion in fees.
Yet the sector has barely moved beyond the starting line. So far only Vitel Wireless and EmoSIM have launched the services. Tier-3 operator, Vitel 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.
USK Mobile director Chidi Azuzie said expectations around MVNO licensing have often been unrealistic.
“Licenses are not cash cows. Many people think that once you get a license, the money will start coming in. The truth is, you have to build the infrastructure, study the market and create services that meet consumer needs. Without this, many MVNOs will quickly collapse,” Azuji said.
Azuzzi said smaller operators, especially in the lower license categories, face enormous financial constraints when trying to support capacity and technical operations.
Still, he sees opportunities if companies target niche markets such as youth services, migrant workers or fintech integration, which has worked in countries like South Africa and India.
He predicted mergers and consolidation across the sector over the next few years, saying, “Half of us may launch, but only those with a clear strategy will survive.”
Tony Imoekpere, president of the Association of Telecommunications Companies of Nigeria, said differentiation will be necessary if new entrants want to remain relevant in a market already dominated by large operators.
“MNOs already provide enterprise services, internet and fintech. MVNOs should find the gaps and focus on them,” Imoekpere said.
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He pointed to Kenya's M-Pesa as an example of how targeted services focusing on disadvantaged users can reshape the market. In Nigeria, he said, opportunities could include lower data packages for point-of-sale machines or services designed for rural communities that lack reliable connectivity.
“Something as simple as lower data packages for POS machines in rural areas could be a game-changer,” Imoekpere said.
Others have warned that copying foreign business models without adapting them to local realities could be counterproductive. IPNX Director Olusola Teniola said the lack of infrastructure and geographical challenges in some parts of Nigeria require a different approach.
“In some villages, people still travel hours by canoe or horse to access basic services. If your business model doesn't take that into account, it will fail,” Teniola explained.
Teniola argued that MVNOs should prioritize the bottom of the pyramid rather than compete directly for urban smartphone users where millions of Nigerians lack reliable connectivity.
The director also warned that failure to strengthen local telecommunications companies could lead to more profits being diverted abroad through foreign-owned operators, raising concerns about data sovereignty and domestic innovation.
Globally, the MVNO model has expanded steadily over the past two decades. Following the initial success of Virgin Mobile, major telecommunications operators in markets such as the United Kingdom began hosting a number of virtual brands in sectors including retail, utilities and expatriate services. There are now more than two dozen MVNOs in the UK, many of which are built around strong distribution channels or existing customer communities. Some host networks have also 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. For example, brands such as Tesco Mobile and Lycamobile grew by taking advantage of supermarket outlets or diaspora-focused distribution channels, showing how non-telecom companies can thrive in the region.
However, Nigeria's MVNO wave is unfolding differently. Experts say the basic principles of launching an MVNO remain universal. Operators need a clear business plan commensurate with their license level, strong wholesale agreements with host networks, reliable technology partners and effective distribution channels. Negotiating wholesale contracts is especially important because poorly structured agreements can undermine the entire business model.
Beyond contracts, operators also have to quickly define a niche market, whether it's financial services, diaspora communications, youth-focused data bundles or enterprise connectivity, while carefully managing branding, customer acquisition and capital expenditure. Even without owning the infrastructure, MVNOs still face costs associated with technology platforms, marketing and operational systems.
Some telecommunications strategists have developed scorecards to assess whether a new MVNO is likely to succeed, ranking factors such as delivery strength, market place, technological readiness, and commercial partnerships. These frameworks are intended to help operators gauge their readiness before launching in a competitive environment like Nigeria.
For policy makers, the South African example remains a useful reference point. By linking spectrum access to wholesale obligations, regulators effectively created a functioning market for virtual operators. Nigeria's infrastructure currently relies more on private negotiations between MVNOs and host networks, which analysts say could slow progress.
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The stakes are high. By February 2026, Nigeria's active mobile subscriptions are expected to grow to 184.6 million with a teledensity of 85.16 percent, making it one of the largest digital markets in Africa. Even a modest expansion of MVNO participation can introduce new services, improve pricing and extend coverage to underserved areas.
For now, the sector remains largely inactive. But telecoms executives say opportunity still remains, if infrastructure bottlenecks are removed, bulk 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 get beyond the initial threshold. With them, Nigeria can unlock a new layer of competition in its telecommunications industry and reshape the way millions of people connect to digital services.