SA's 20-year-old two-horse race between Vodacom and MTN may soon become more of a photo finish than a runaway victory.
MTN has said it will dedicate a significantly amplified amount of money to improving its network this year, in the wake of already having clawed back a decent amount of subscribers over the second half of 2014.
According to MTN's year-end results, released yesterday, the operator - which has, since inception, only ever been runner-up to its red rival - has seen an 8.9% increase in subscribers over the past year. Of this, 2.7 million net additions took place during the second half of the year, with just 430 496 of the total coming on board in the first half of 2014.
This puts MTN's active subscriber base at 28 million, while Vodacom had about 31 million as at December 2014. In the whole of Africa, Vodacom has about 61 million subscribers compared to MTN's 200 million, although MTN operates in more markets and has 60 million subscribers in Nigeria alone.
Yesterday, MTN announced a huge capital expenditure increase to R10 billion for SA - almost double the capex it put in last year (R5.6 billion). MTN group president and CEO Sifiso Dabengwa said yesterday this would go towards improving network quality and coverage in SA.
MTN SA CEO Ahmad Faroukh went further, committing the company to a time frame of 18 months, after which he said the operator's network would have no gaps when compared to its competitors. Arch opponent Vodacom is investing R8.5 billion in network coverage and quality this year.
Leader board
Ovum analyst Richard Hurst says SA is likely to see the two-horse race becoming closer, which will be good for consumers and enterprise, as the increased competition will see a corresponding lowering of prices and improved service.
Vodacom has always held the market - thanks to what analysts say was a slight first mover advantage in terms of network coverage, heavy brand investment and an astute customer strategy.
"Vodacom have been very astute in their approach to the South African market. In the initial days of mobile cellular in South Africa they focused on coverage and their distribution network, basically getting SIM cards and devices into people's hands," says Hurst.
"Vodacom has since evolved and has focused very much on the customer and been cognisant of changes in market perception and quick to respond with special offers, etc."
BMI-TechKnowledge director Brian Neilson adds, if global branding has a role to play, "we should remember that Vodafone is a huge global brand too". Without a "serious misstep", he says, Vodacom is likely to hang on to pole position for some time to come.
As far as MTN's latest local efforts go, ICT expert Adrian Schofield says better coverage and better quality of service will attract more subscribers. "Whether the slightly greater investment will tip the balance in MTN's favour remains to be seen."
The fact that MTN has always taken second place has not always bothered the company, says Schofield. "Up till now, this has not mattered to MTN, who have been aggressive in other markets, but the slowing growth in Nigeria and the problems in Iran have probably helped to focus attention on the home market."
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