Major African Mobile Markets: Future Growth Prospects 2006-2011  

Claim your FREE copy of the 'Africa Mobile Factbook' now! 22-pages of detailed data on the African mobile industry with analysis by Country and by Operator. Home Subscribe Subscriber Log-in Free Trial Subscription Password Registration Africa & Mid East Telecoms Free News Telecoms Market Resources Mobile Operator Statistics Operators & Regulators MVNOs in the Middle East Market Research Reports Country Reports Custom Research Back Issues Events Telecoms Market Research Contact About Terms & Conditions Privacy

Back Industry Overview Mobile Market Future Outlook Figure 1: South Africa - Mobile Subscribers and Penetration (2002-2011) Figure 2: South Africa - Market Share of Mobile Network Operators (June 2005) Figure 3: Vodacom - Ownership Structure (April 2005) Figure 4: MTN Group Limited - Ownership Structure (March 2005) Table 1: South Africa - Important Economic Parameters (2004) Table 2: South Africa - Telecom Industry Snapshot(2004) Table 3: South Africa - Mobile Subscribers (2002-2011, In Million) Table 4: Vodacom South Africa - Key Performance Indicators (FY end-March 2005) Table 5:MTN South Africa - Key Performance Indicators (FY end-March 2005) Click here for an overview of the Southern African telecoms industry. The Republic of South Africa (RSA) is one of the most developed and modern economies on the African continent. The country's stock exchange ranks amongst the largest 15 in the world. South Africa is a developing country with an abundant supply of almost all natural resources, except petroleum products. It is the world's largest producer of platinum and gold. Its major economic strength is its well-developed services sector, which accounts for approximately 65 percent of the total GDP. Some of the other developed sectors are energy, transport, finance and communications. The country has people from diverse origins and recognises 11 languages as official and another eight as non-official languages. However, South Africa faces some major problems, such as a lack of economic empowerment and an unbiased education system, which are a result of the apartheid era in the country. Some other issues of concern in the country are crime, corruption and high rates of unemployment. South Africa also faces the problem of prolonged droughts and HIV/AIDS, and such factors have been hampering the country's developments. Table 1 provides an overview of the country's key economic parameters. Table 1: South Africa - Important Economic Parameters (2004) Telecom Industry Overview South Africa's mobile subscriber base is five times the size of its fixed-line subscriber base. South Africa's telecom sector is the most developed and advanced in Africa. The growth in telecom services has been primarily driven by the mobile sector, and South Africa's mobile subscriber base is now more than five times the size of its fixed-line subscriber base. However, in order to encourage growth in fixed-line communications, a second fixed-line licence has been granted to a consortium of companies including Nexus Connexion, Transtel and Eskom, Tata and CommuniTel. The operator is expected to launch its services in the second half of 2006. Currently, the fixed-line market is monopolised by Telkom, former State owned incumbent and 50% owner of the mobile operator Vodacom. Table 2: South Africa - Telecom Industry Snapshot(2004) Mobile Market South Africa has the most developed and advanced mobile market is Africa, and the country has been one of the fastest growing markets on the continent in recent years, in term of net subscriber additions. It is also the largest market in Africa in terms of revenue and subscriber numbers. The mobile penetration rate in the country was approaching approximately 50 percent in the middle of 2004 as against the average penetration rate of nearer 10 percent in many parts of Africa. There are three mobile network operators in South Africa, namely Vodacom, MTN and Cell C. The various technologies present in the country are 2G (GSM), 2.5G (GPRS and EDGE) and 3G (UMTS). 3G services were launched in December 2004 and are currently provided by two operators. The launch of 2.5G (GPRS and EDGE) and 3G has led to the introduction of a number of new value-added services in the country. South Africa is the biggest SMS market in Africa, with around 3.8 billion SMS being sent in 2004 alone. More than 71 percent of the country's population has adequate coverage from all three networks and most of the urban areas and national roads in South Africa have GSM 900 coverage. Market Size The total number of mobile subscribers in South Africa at the end of June 2005 was 25.18 million, with a corresponding penetration rate of 56.7 percent. Pre-paid customers constituted approximately 85 percent of the total subscriber base. The number of mobile subscribers in South Africa increased by 23.3 percent; from 17.17 million at the end of 2003 to 21.18 million at the end of 2004. This growth is expected to increase at a CAGR of approximately 4.7 percent resulting in a mobile subscriber base of approximately 39.06 million by the end of 2011. The corresponding penetration rate is expected to increase to 90.6 percent. Moreover, the number of 3G subscribers, which accounted for only 5 percent of the subscribers in 2005, is expected to constitute more than 42 percent of the total subscribers in 2011. Table 3 shows the forecasts for mobile subscribers in South Africa for the 10-year period from 2002 to 2011. Table 3: South Africa - Mobile Subscribers (2002-2011, In Million) Source: Portio Research Ltd. Figure 1 illustrates the trends and forecasts for mobile subscribers and penetration rate in South Africa for the 10-year period from 2002 to 2011. Figure 1: South Africa - Mobile Subscribers and Penetration (2002-2011) Source: Portio Research Ltd. Mobile Network Operators South Africa's mobile market has three major operators - Vodacom, MTN and Cell C, with Vodacom holding more than 55 percent of the market share at end-June 2005. MVNOs were not present in the market in 2005. However, Virgin Mobile is expected to launch its services on the network of Cell C in the country by June 2006. Figure 2, below, provides the break-up of market share of the operators, in terms of subscribers, in June 2005. Figure 2: South Africa - Market Share of Mobile Network Operators (June 2005) Source: Company Reports The three operators currently providing mobile services in South Africa are discussed below: Vodacom Vodacom obtained its licence to provide GSM cellular services in South Africa in 1993, but launched its commercial services in the country on 1st June 1994. It further launched its GPRS services in 2002 and also pioneered 3G services in the country in 2004. The various value-added services offered by the operator include SMS, MMS, video messaging, mobile TV, Internet access, content downloads, information alerts, such as news and sports, and Blackberry email. Figure 3 shows the ownership structure of the company as on April 2005. Figure 3: Vodacom - Ownership Structure (April 2005) Source: Company Reports Table 4, below, provides an overview of the operator's key performance indicators. Table 4: Vodacom South Africa - Key Performance Indicators (FY end-March 2005) Source: Company Reports. MTN MTN obtained a licence to provide mobile services in the country in 1993 and commercially launched its network in 1994. MTN provides mobile services in the country through MTN Network Operator, MTN Service Provider and MTN Network Solutions. The operator provides 2.5G (GPRS and EDGE) services and has also started its 3G (UMTS) services since June 2005. MTN also provides value-added services, such as SMS and MMS messaging, Internet access and content downloads, BlackBerry, etc. MTN reported that data services constituted 5.9 percent of total service revenues in the year ending March 2005 as compared to 5.1 percent in the previous financial year. The bulk of data revenue was contributed primarily by SMS. In 2005, MTN launched BlackBerry services for its subscribers and also began trials for High Speed Download Link Access (HSDPA) to provide services such as video telephony, multiplayer games, interactive TV, etc. MTN's operations in South Africa are completely held by MTN Group Limited, which is headquartered in South Africa. Figure 26 illustrates the shareholding structure of MTN group. Figure 4: MTN Group Limited - Ownership Structure (March 2005) Source: Company Reports Note : Non-Public includes Directors of MTN Group Limited, MTN Group Employees, shares held by MTN Holdings Share Trust and Newshelf 664 (Proprietary) Limited Table 5 provides an overview of the operator's key performance indicators. Table 5: MTN South Africa - Key Performance Indicators (FY end-March 2005) Source: Company Reports Cell C Cell C launched its GSM network in South Africa in 2001. The operator also launched EDGE-based services in 2005 enabling it to offer value-added services such as MMS, Internet access and content downloads, etc. The entry of Cell C has incited competition in the mobile market, which was previously dominated by the duopoly of Vodacom and MTN. Cell C had 2.48 million mobile subscribers as on 30th June 2005, and the company reported 3.2 million at end-December 2005. Cell C is completely held by 3C Telecommunications, whose shareholders (as on September 2005) included Oger Telecom South Africa (60 percent), CellSAf (25 percent) and Lanun Securities SA (15 percent). Recent Developments The following are some of the recent developments that have influenced South Africa's mobile market: Mergers and Acquisitions In November 2005, Vodafone, which is the second largest stake holder in Vodacom at 35 percent, indicated its plans to increase its stake to 50 percent. By late January 2006, Vodafone had taken majority control of Venfin, which is the smallest of the three present Vodacom shareholders. Vodafone previously owned 15% of Venfin, and with this acquisition Vodafone now control 50% of Vodacom, the other 50% being owned by Telkom SA Ltd. Cell C entered into a 50:50 joint venture agreement with Virgin Mobile to form a new mobile service provider in South Africa, which would operate as an independent service provider under the Virgin Mobile brand on Cell C's network. The service provider is expected to launch its services by June 2006. Technology Innovations and New Services Vodacom launched the first Mobile TV service in South Africa in December 2005. The services are available to its 3G customers. Vodacom will be launching some new services across the country in 2006, such as Vodafone Mobile Connect Card and 'Vodafone Live!' In 2005, a number of new services; such as BlackBerry, were launched by both Vodacom and MTN. Also, MTN began trials for High Speed Downlink Packet Access (HSDPA) to provide some of its selected enterprise subscriber's faster access to applications such as mobile and interactive TV, enhanced video telephony, multiplayer gaming and information sharing. The market has shown strong growth in the recent past with its subscriber base increasing by more than 20 percent at an annual average since 2002. Top of page Future Outlook South Africa's mobile market is the most advanced market in the region with the penetration rate exceeding 55 percent at end-June 2005. The market has shown strong growth in the recent past, with its subscriber base increasing by more than 20 percent at an annual average since 2002. Moreover, the market has also shown a trend towards the growth of value-added services in the recent past, and compared to the great majority of African nations, non-voice value added services in South Africa are leading the way by a very wide margin. Value-added services are expected to play an important role in the future growth of the mobile market, particularly in bolstering revenues as the market grows towards saturation. Churn and saturation are clearly areas of concern for South African operators, and the market seems to be focussing on adding value, increasing ARPU, controlling churn and improving customer loyalty. The launch of value-added services such as Mobile TV, BlackBerry, etc., and the moves from Vodafone and Virgin Mobile into this market, all support this conclusion. It will be most interesting to watch Cell C's market share once Virgin is operational, and we should probably expect to see the Vodafone brand growing in South Africa too. Value-added services are expected to play an important role in driving revenues in the mobile sector in the future. The country's stable economic conditions are also expected to complement the developments in the telecom sector, in order to drive the growth of the mobile sector in terms of subscribers as well as revenue. The mobile penetration rate in South Africa is expected to reach approximately 90 percent by the end of 2011. Top of page Copyright © 1998-2009 Africa & Middle East Telecom Week