The trap that stops MTN and Vodacom eating Cell C’s lunch

MTN and Vodacom are structurally constrained from competing hard for mobile virtual network operator hosting business, Cell C CEO Jorge Mendes has argued, because at their market shares an aggressive wholesale push would cost them retail customers to their own wholesale clients.

“If I had an 80% market share, I would not be going into the MVNO space in any aggressive way,” Mendes said, “assuming that my retail business has got healthy margin and I’m structured for that.”

The constraint is not permanent, he said, but it is slow to fix. An operator would have to restructure so that the contribution margin on wholesale is similar to the margin on retail. Mendes put that at a multi-year exercise – “short term is probably two to three years, depending at the pace at which they can go” – and said whoever completes it will determine who has the appetite for the business.

Asked directly whether Cell C’s retail and wholesale margins are already comparable, Mendes said they are.

That is the answer to the obvious question of why the third operator can pursue a strategy the first two cannot. Cell C runs on MTN and Vodacom infrastructure rather than its own radio access network, so it carries none of the retail base that would be cannibalised. Its wholesale division grew revenue 20% to R1.76-billion in the year to 31 May 2026 , adding 1.2 million MVNO subscribers to reach 5.71 million lines, and the company reckons it hosts 80-85% of the South African MVNO market.

MTN has said it wants to be South Africa’s leading MVNO wholesaler, and Vodacom has entered the hosting market. Mendes is unimpressed by the latter. He said Vodacom has done nothing beyond signalling an intention, and that there is nothing sitting in its MVNO space.

Pressed on Mr Price, he conceded the point but said the arrangement predates any strategy shift and is being classified as wholesale MVNO despite having been in place for years. Cell C hosts Mr Price, too, under what Mendes described as a dual-vendor arrangement.

He was less dismissive of MTN, which he said has hosted wholesale customers for some time. He pointed to Standard Bank, which moved to MTN with its own platform , while the legacy subscriber base stayed with Cell C through MVNX.

On whether anything structurally prevents MTN from undercutting Cell C on wholesale prices, Mendes was careful. Competition rules on margin squeeze and abuse of dominance apply, and Cell C is by a distance the largest buyer of wholesale traffic in the country. Selling a fraction of that volume at significantly lower prices would raise a margin squeeze question. On a like-for-like basis, he said, there is nothing stopping them, and competition is welcome.

MTN has already conceded part of Mendes’s premise.