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Major African Mobile Markets: South Africa

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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 (2011)

Economic Parameter

Value

Population (2011)

49.004 million

Population Growth Rate (2011)

-0.38 percent

Unemployment Rate (2011)

25 percent

GDP (PPP) (2010)

USD 527.5 billion

GDP - Real growth rate (2010)

3.0 percent

FDI inflow (2010)

USD 1.3 billion

Telecom Industry Overview

South Africa's mobile subscriber base is thirteen times the size of its fixed-line subscriber base at the end of 2010.

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 penetration rate grew to 105 percent in 2010, a total of 51.6 million subscribers. Fixed-line access has been falling since 2004, and now accounts for less than 7 percent of the market, while ADSL subscribers grew by 15 percent in 2009 from 4.59 million in 2008 to 5.3 million, according to Worldwideworx.

The fixed-line market was monopolised by Telkom, former State owned incumbent who had a 50 percent stake in mobile operator Vodacom which was re-assigned in early 2009, but was joined in August 2006 by Neotel, owned by a group consisting of Tata Communications, Nexus Connexion, Comunitel and Two Consortium. This has brought competition to the broadband market, though bandwidth prices remain high. Telkom has also now entered the mobile arena with its own 8ta offering.

Table 2: South Africa - Telecom Industry Snapshot(2010)

Segment

Mobile

Internet

Fixed

Subscribers(millions)

51.6 million

6.80 million

3.70 million

Penetration

105%

13.8%

11.0%

Year-End

2002

2003

2004

2005

2006

2007

2008

Subscribers

13.58

13.91

18.03

29.8

37.6

43.9

49.5

Year-End

2009

2010

2011E

2012E

2013E

2014E

2015E

Subscribers

49.7

51.6

55.07

57.82

60.14

62.0

63.6

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 (2002-2015E)

Mobile Network Operators

South Africa's mobile market has three major operators - Vodacom, MTN and Cell C, with Vodacom holding more than 43 percent of the market share, Virgin Mobile (MVNO, uses Cell C) is 10 percent.

Figure 2, below, provides the break-up of market share of the operators, in terms of subscribers, in 2010.

Figure 2: South Africa - Market Share of Mobile Network Operators (2010)

Table 4, below, provides an overview of the operator's key performance indicators.

Table 4: Vodacom South Africa - Key Performance Indicators (FY end-March 2011)

Value

26.5

USD 6.7 billion

USD 22.88

13.2%

743.2

KPI

Subscribers (Mn)

Revenue (USD)

Monthly ARPU

Annual Churn (%)

CAPEX (Mn USD)

Source: Company Reports

Table 5 provides an overview of the operator's key performance indicators.

Table 5: MTN South Africa - Key Performance Indicators (FY end-December 2010)

KPI

Subscribers (Mn)

Revenue (USD Mn)

Monthly ARPU (USD)

Annual Churn (%)

CAPEX (USD Mn)

 

Value

18.84

USD 16.6

16.32

NA

5.69

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