Major African Mobile Markets: South Africa

 

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 (2017)

Economic Parameter

Value

Population (2017)

54.842 million

Population Growth Rate (2017)

0.99 percent

Unemployment Rate (2017)

28 percent

GDP (PPP) (2017 est)

USD 757.3 billion

GDP - Real growth rate (2017 est)

0.7 percent

FDI inflow (2016)

USD 2.3 billion

Source: CIA Factbook

 

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 - ICASA Telecom Industry Snapshot (2016)

ICASA Report on State of SA ICT Sector 2017
Source: ICASA Report on State of SA ICT Sector 2017

 

Mobile Market

Figure 1 illustrates the trends and forecasts for mobile subscribers and penetration rate in South Africa for the 11-year period from 2005 to 2015.

Figure 1: South Africa - Mobile Subscribers and Penetration (2005-2015E)

Source: industry sources, Blycroft estimates c. Blycroft 2018

Mobile Network Operators

South Africa's mobile market has three major operators - Vodacom, MTN and Cell-C, with Vodacom holding around 44 percent of the market in 3Q 2017.
Cell-C hosts the majority of Mobile Virtual Network Operatots (MVNOs) on its network, and this business is eported to contribute some 25 percent to the company's growth. MyBroadband quoted Cell-C's Wholesale Business Chief Bjorn Flormann, speaking at the 2017 MyBroadband Conference, as putting the value at some ZAR 600-800 million (USD 42.9 - 57.2 million) of the company's revenue. It was noted that FNB's operation had been particularly successful. MVNO clients include

Virgin Mobile South Africa; me&you; mrp mobile;  FNB; Smart Mobile; iSmart; The Unlimited; Afrihost; Hello Mobile; Econet Wireless ; iBurst; Lycamobile; AfriFoon and PSB Network. In June 2016 MTN South Africa also said that it would host MVNOs on its network.

Figure 2, below, provides the break-up of market share of the operators, in terms of subscribers, in 2017.

Figure 2: South Africa - Market Share of Mobile Network Operators (1Q 2017)

South Africa - Market Share of Mobile Network Operators (1Q 2017)

Vodacom - Ownership Structure (2017)

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

Table 4: Vodacom South Africa - Key Performance Indicators (31 March 2017)

KPI Value
Subscribers (Million) 34.18
Revenue (Rand Million) 62 279
Monthly ARPU R 112
CAPEX (Rand Million) 8 747
IoT Connections (Thousands) 2 264

 

 

MTN Group Limited - Ownership Structure (December 2016)

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 2016)

KPI Value
Subscribers (Mn) 30.8
Net Additions 175,000
Revenue (Mn) R 41,922
CAPEX (Mn) R11,085

Technology Coverage: 

2G

 

98.68% population

3G 93.29% population
LTE 47.30% population

 Source: Company Reports