The Investor SA

17 February, 2015

Werne van der Merwe

 

-It's a "dog eat dog" kind of industry-

 

In South-Africa's Mobile Networking Operators battle, Vodacom has certainly taken the crown, leaving Cell C and MTN to battle it out for the wooden spoon. Vodacom leads the way with over  30 million subscribers, following with MTN obtaining over 25 Million , leaving  Cell  C  with some catching up to do with 15 million subscribers.

 

These certainly are  tough economic conditions, and  an  even tougher  Telecoms  market. Some  even  referring  to  it  as  a "dog  eat  dog environment", meaning  growth  for  one company  spells  a  loss for another. In  the  six months  leading to December, Vodacom increased its prepaid customer base by an astounding  927  thousand members in South Africa. This brought the group's revenue growth of  7.5 %  to R36.6 billion.

 

In the  six  months  leading  up  to  September, Vodacom's , doing

reasonable well with prepaid customers, contract customer base's

growth  remained  flat. The  group  is  currently  in  the process of

accelerating  network  investing to cope with the continued growth

of  data   usage  and  traffic. This  is  to  be  a  smart  move   from

Vodacom, considering that  the  average  data  usage  per  smart

phone in  South- Africa increased to  79% , Vodacom claimed that

the group's data traffic exceeds more than 80%.

 

Vodacom  was  proud  to  announce  that   the   group's   contract

customer  base  grew by  2.2 %  to  48 - million, even  though  the

customer revenue was flat  at  R 10639 million  year on year. This

of course, is as a result of  Vodacom's  data  prevalence  contract

customer  ARPU  ( Average  Revenue  Per User )  decreasing  by

3.2%  to R393 per month.Vodacom has succeeded to, in their six

month  period, increase  their  active  customer  base  by 9.7% to

53.8-million, as well  as  949, 000  increased  net  connections  in

South - Africa, and   an   increase  of   2.3 - million  customers  in

international operations.

 

Cell C's CEO, Jose dos Santos, declared at the end of April 2014

that  their  total  subscriber  base was  16.6  million, after gaining

1.5  million  subscribers  in  the  last  three months leading up  to

April  2014. This  was  only half of  what  they reported in  the  quarter of  April. Should they have

reached the reported figures, they would have gained 5% market share and would have reached

their market share target of  20% Well ahead of Telkom Mobile, the newest edition to the already

competitive  mobile  networking  operator's  market  in  South Africa, has 1.8  million subscribers,

giving them  2.5%  of the total market share.

 

The biggest shift has been in MTN SA, which has lost  a total  market share of  up  to  5% to their

rivals Cell C. In the three months leading up to March, MTN disconnected  973  064  subscribers,

for they did not reproduce any signs of revenue growth. This eventually lead the MTN subscriber

base to fall to  24.9  million. The JSE - listed Blue  Label  Telecoms  reported that the country's 2

smaller mobile  network  operators, Cell C and  Telkom, were both  winning market  shares  from

MTN. From  December  2013  up until   May  2014, a period of  six months, MTN's  market share

dropped  down  by  3%  from  32%  to  29%. A constant performance from  Vodacom  saw  them

remaining stable at 50%, while Cell C just kept on increasing their market share from 8% to 17%,

and  how  they  are  currently  sitting   on   18%,  while   Telkom   has   shown   massive   growth

improvement after growing by a 100%  from  1%   to   2%.  So  to  come to conclusion, MTN has

been falling backwards, Vodacom  has remained stable While Cell  C  have  been  winning  over

market shares from the "top dogs".