Capitec continues its assault on SA’s mobile telecoms industry, launching a new offering where customers will be able to purchase smartphones directly from the bank.
This is part of Capitec’s strategy to entrench itself further into the lives of its customers, thus reducing the chance of such customers leaving or switching away from the bank.
On Wednesday, SA’s largest retail bank by customers reported that Capitec Connect now has 22 devices available for purchase. As a sweetener, customers are being offered 30GB of free data, delivery within three days and zero-deposit finance options.
“Our clients were already saving significantly with our Capitec Connect SIM and are now able to save even more with our affordable smartphones that are available to buy directly on our app. Advances to purchase smartphones have also been launched,” the bank said as it reported earnings for the half year to end-August.
Device sales and financing are big business in SA. Consumers typically have the option of buying devices from retail outlets and mobile operators. Capitec is following in the footsteps of rivals like FNB that have been selling devices for a number of years.
In February, Standard Bank rebooted its mobile device offering with a broader range of tech brands and financing terms to boost customers for its telecom business.
Vodacom, SA’s largest mobile operator, recently launched a service allowing for smartphones to be paid off daily as a way to increase device affordability. In the same vein, MTN recently began offering a segment of its customers smartphones for as little as R99.
Capitec Connect is the bank’s mobile virtual network operator (MVNO) business. MVNOs are usually non-telecom businesses — including FNB, Standard Bank Mobile, Mr Price Mobile and Pick n Pay — that lease network infrastructure from mobile operators to sell data and voice services to their own customers. Capitec uses Cell C’s network for its service.
Capitec’s mobile unit started contributing positively to the bank’s earnings in the 2024 financial year.
SA’s largest retail bank by customers reported that Capitec Connect’s net income for the half year to end-August rose to R165m from R69m previously.
The number of customers that were active in the last 3 months reached 1.1-million, almost doubling from 600,000 in the prior comparable period.
Like its rivals, Capitec has been using its digital channels to push sales for products such as airtime, data and electricity, commonly referred to as value-added services (VAS). Mobile operators and power utility Eskom pay a commission to Capitec and others for driving such sales.
While much of this activity has tended to happen through mobile and online banking channels or apps, part of the strategy shift is using MVNO services to further drive VAS sales.
These lines of business, classified as fintech, contributed R2.1bn to group headline earnings, up 29% from R1.5bn a year prior. Fintech now accounts for 26% of group headline earnings.
The bank said 12-million clients purchased VAS via its banking app last month.
In addition, the bank is using its mobile unit as a way to reward customers in other areas.
For example, all personal banking credit card clients “get 1% cash back on credit card purchases and receive 1GB of free Capitec Connect data every month.”
For a number of years, the largest MVNO player in SA was FNB. However, information and communication technology research and consulting company Africa Analysis has reported that Capitec Connect has emerged as SA’s largest MVNO, relegating FNB’s unit to second place.
In August, Capitec entered the lucrative airtime advance market with a new proposition to its 25-million-strong client base as it boosts its value-added services play. The lender looks to strengthen its already dominant position, through which it captures more than 40% of SA’s airtime and data transactions.
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