When a small mobile brand signs up for network access, it now faces a choice that did not exist before: pay less and accept a lower guaranteed data speed, or pay more for a faster pipe. That trade-off is the core of MTN South Africa’s new wholesale model, announced by CEO Ferdi Moolman in an interview with TechCentral.
Wholesale access, the practice of selling network capacity to mobile virtual network operators (MVNOs), has traditionally been priced almost entirely on volume. An MVNO would agree on a certain amount of traffic, pay a premium if it exceeded that amount, and receive the same network quality as MTN’s own retail customers. Quality, meaning the minimum throughput a user can expect, was never part of the calculation.
Under the revised scheme, quality becomes a variable. Moolman illustrated the idea with a simple example: a guarantee of 20 megabits per second (Mbit/s) will cost less than a guarantee of 100 Mbit/s. An MVNO that wants to compete on aggressive retail pricing can therefore buy cheaper capacity, but must accept that its customers may experience slower speeds during peak periods.
The change matters most to the roughly 30 MVNOs that currently sit on MTN’s network, many of which operate under brand names that are invisible to the broader market. Existing partners include Pick n Pay Mobile, Afrihost Air Mobile and Melon Mobile. For these operators, the ability to lower wholesale costs could improve margins, but it also forces them to manage a new quality-of-service promise to their own subscribers.
MTN says the move reflects a more disciplined wholesale framework. Moolman warned that some MVNOs treat telecommunications as a loss leader, selling services below cost to attract customers, which he believes erodes market value. By linking price to guaranteed throughput, MTN hopes to align incentives: MVNOs that need high-speed data will pay a premium, while those targeting price-sensitive segments can opt for a lower-cost, lower-speed tier.
From MTN’s perspective, the model also addresses the economics of spare capacity. The operator often runs its radio access network at 30 to 40 percent utilisation, meaning a significant portion of its infrastructure sits idle. Selling that idle capacity at a reduced yield still covers marginal costs, because MTN deals with a single wholesale client rather than a full retail base, and avoids marketing, call-centre and service-centre expenses.
However, Moolman flagged a potential downside. Wholesale yields that fall too low could weaken the business case for further investment, particularly in rural coverage and 5G rollout, areas where MTN already sees slower progress than expected. If the price-quality trade-off discourages MVNOs from using higher-speed tiers, the revenue needed to fund network upgrades could be squeezed.
Potential impact on the broader market
The new pricing structure could ripple through South Africa’s mobile ecosystem. Smaller MVNOs may find a clearer path to profitability, but they will also need to be transparent with end-users about the speed limits attached to their plans. For consumers, the shift could mean a wider range of price points, but also the risk of experiencing slower data rates if they choose the cheapest option.
MTN’s arrangement with Cell C adds another layer of complexity. While Cell C runs its own spectrum, it relies on MTN’s radio access network for both prepaid and MVNO traffic, and the two operators share spectrum in a pool. That partnership is currently under renegotiation, and any changes could affect the cost structure for MVNOs that sit on either network.
In short, MTN is turning a previously flat wholesale price into a menu of options that tie cost directly to performance. For MVNOs, the decision will hinge on their target market and how much they are willing to invest in speed versus price. For MTN, the gamble is whether the lower yields from cheaper tiers will be offset by higher utilisation of spare capacity and a more sustainable wholesale business.
