It’s true to say that Capitec, through its mobile virtual network operator (MVNO), Capitec Connect, has disrupted the market, with it attracting 1.5 million active clients by the three months to the end of February.
But the true bombshell it dropped was in March when it announced that all on-network Capitec Connect calls would be free. This means anyone with a Capitec Connect SIM is able to make voice calls to someone else on the bank’s virtual network for free.
Given that it has managed to attract a significant base in a very short space of time, to announce this now is quite something.
Because of network effects, this is the shrewdest move Capitec could’ve and would’ve made.
It knows that being able to attract each new subscriber to the network is worth a specific amount and it would’ve factored this into its calculations.
Why would a hypothetical subscriber, on Vodacom or MTN (or Telkom or Cell C), who has a family member or close friend on Capitec Connect stay on that network versus switching?
This is a classic example of network effects, where the Capitec Connect service becomes more valuable as more people use it.
It knows that its network will grow exponentially more useful with each additional user.
That’s the move Capitec is making.
And it has a broad and deep base of existing customers to draw from.
It has 26 million active banking clients, of which 15 million are active on its app (basically 10 million are fully banked). The MVNO deal with Cell C looks genius in that it generates revenue (and profit) from each SIM it activates.
Key, though, is driving and sustaining usage by customers.
In the past year, Capitec says its Connect business has seen data usage soar 202% from 13.4 petabytes to 40.5 petabytes, in total.
In total, it has offered three petabytes of free data to customers, which equals R78 million in value.
It contends that it has saved its Connect customers R330 million “through lower data pricing”.
The ‘free on-network calls’ decision is also interesting in the context that in the last year, Capitec Connect customers used 768 million minutes – a 150% increase on the prior year.
In the year, Capitec generated R442 million in net income (profit) from Capitec Connect, more than double the prior year’s R193 million.
To turbocharge this growth, Capitec has begun offering a number of smartphone and other devices which, when ordered on the app, are delivered in three days.
This provides its base with access to premium devices like Apple iPhones and Samsung Galaxy phones, with repayments across a period between 12-36 months. This credit is effectively granted on the bank’s existing rails: credit card, access facility or purpose loans. Customers can also pay for devices cash.
Importantly, it does not network-lock these devices, which preserves their resale value.
Along with this, it offers devices with free 5GB (gigabyte) of data a month, which is worth R1 200, when customers link their Capitec Connect number to their main account. This will help cement primacy across both its banking and cellular relationship with that client.
It bears remembering that Capitec Connect’s backbone is Cell C, which is effectively the MTN network. Increasingly, the growth of Capitec Connect is central to the future of Cell C, even as the former no doubt switches some customers from the latter.
In Cell C’s maiden results as a JSE-listed company (for the six months to 30 November 2025), practically all of its service revenue growth came from its wholesale (MVNO) business, which grew 22.5%.
It has 5.1 million MVNO lines active on its network and, together, these delivered wholesale revenue of R840 million in the six months. Already, wholesale is 15% of group revenue, not too far from its postpaid (contract) base which comprises 21%.
Because it benefits as the platform operator, the impact of Capitec Connect on Cell C overall is limited. Not so for Vodacom, MTN and Telkom, who are all likely to see their prepaid bases under additional pressure.
This article was republished from Moneyweb. Read the original here.