Vodacom, SA's largest cellular provider, has lost more than a million subscribers in three months, because of the SIM card registration Act, it says.
The company says the effect of the law has mostly been felt in the prepaid sector, with a 1.3 million reduction in prepaid customers in the quarter, to 22.6 million.
The loss of subscribers was attributed to the implementation of RICA, the Regulation of Interception of Communications and Provision of Communication-Related Information Act, in the middle of last year.
CEO Pieter Uys, addressing the media this morning after the release of the company's third quarter trading update to December, said the effects of RICA are expected to slow. By the end of the year, he anticipates churn and gross connections balancing each other out.
“The RICA effect is clearly evident when you look at the quarter, which is down quarter-on-quarter,” says Uys.
MTN said in October that its South African subscriber base was down 4.7%, in the three months to September, as 800 000 users were disconnected due to the Act. Vodacom lost 530 000 connections from June to September.
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Frost & Sullivan ICT analyst Spiwe Chireka says Vodacom will need to take drastic measures if it doesn't want to experience another fallout, when the 18-month RICA deadline rolls around.
She says Vodacom is likely to experience a similar loss of existing customers when unregistered users get cut from the network.
Chireka says the company will have to be innovative when it comes closer to the deadline. “But it is very difficult; many South Africans don't have ID books. Before, you could just waltz into a retail shop and pick up a phone.”
Uys says the company has already registered a third of its subscriber base, and aims to have 100% of its customers comply with the law by the end of the year. He says Vodacom intends to sit down with the Department of Communications to review the progress, and tell it of the difficulties the operator faces.
Solid revenue
Despite losing a million customers, Vodacom grew revenue in SA by 7.5%, to R13.4 billion, and revenue overall grew 6% year-on-year, to R15.4 billion. SA's performance offset revenue declines in Tanzania and the Democratic Republic of Congo.
Absa Investment analyst Chris Gilmour says the company's revenue growth is good in light of the fact that SA - Vodacom's largest market - has reached saturation and the operator lost a million prepaid customers.
Vodacom had a good third quarter and “strengthened its market position in key geographies”, says Uys. Data revenue growth aided the company, accelerating during the quarter to 35.2% due to increased penetration of mobile PC connectivity and mobile Internet usage, with broadband customers increasing 48.8%.
In addition, it benefited from growth in contract service revenue, which was off the back of a 12.5% increase in the contract customer base to 4.3 million in SA.
“This has been a positive quarter for Vodacom, featuring solid overall revenue growth and continued progress in building our data business,” says Uys.
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