Smaller players in SA's dynamic mobile market are increasingly clawing out their share, while the "mobile price war", which has been raging for about a year now, is slowly changing the local landscape.
This is according to analysts, speaking to the fact that second mobile operator MTN lost 470 000 (1.9%) subscribers in the March quarter from the December quarter - ostensibly due to aggressive offerings by competitors and widened disparity in the flat call rates.
While MTN's total subscriber numbers are up by 3.2%, the group's CEO and president Sifiso Dabengwa says local operations were impacted by a high level of churn.
With a primarily prepaid subscriber base, churn among SA's mobile operators is neither unique nor new, but analysts say the country's mobile profile is starting to morph in light of recent developments - notably the campaign being waged by Cell C to provide a flat rate and a more simplified cost basis for calls.
Cell C campaign
Arthur Goldstuck, MD of World Wide Worx, says while the numbers for porting are not dramatically high, they are strongly weighted towards Cell C. "That would also be reflected in the take up of prepaid accounts."
Cell C CEO Alan Knott-Craig says the operator's customer base was in decline a year ago, but "after the introduction of better and simplified tariffs, as well as building significant network coverage" the net decline has recovered. Knott-Craig says the customer base has increased significantly in the past six months.
"The base is currently growing at a net 200 000 customers a month (approximately). In the past 12 months, the base has improved from about nine million customers to almost 11 million customers."
On the other hand, Goldstuck points out that networks are realising subscriber numbers for their own sake are not a competitive differentiator. "In fact, this results in decreased average revenue per user, even when overall profit is rising. In other words, having a huge amount of low-spending subscribers on your network doesn't look good in the most closely watched metrics, and we are finding less of a drive from MTN and Vodacom to sign-up prepaid accounts willy-nilly."
Africa Analysis analyst Dobek Pater says churn among operators has slowed down over the past year, but increased over the past three to four years due to fickle consumers. Cell C, he says, has seen the most significant growth.
Goldstuck says MTN's recent churn rate is pretty much in line with industry expectations.
Market morph
In terms of market share, Goldstuck says "we are certainly seeing Vodacom surrender its dominance in the sense of having more than 50% of the subscriber base".
He says that percentage will keep dropping as the two smaller players, Cell C and Telkom Mobile, claw out a share of the market.
Churn rates, he says, are historically high in SA. "They have been high for much of the past decade; around 8% to 10% for contract, and 40%-plus for prepaid."
He says the only time churn was static in SA was in the first two years of the cellular industry - and primarily before prepaid was introduced.
SIMs multiply
Analysts point out that the increasingly multi-SIM environment in SA is more of a driver of a changing landscape than subscriber churn.
Pater says churn is a constant factor. "It is normally around 10% on post-paid and much higher on prepaid - anywhere up to 80%. Almost all SIM cards are rotated on an annual basis."
Pater says SA is moving more and more into multi-SIM ownership, which significantly changes the overall growth of the market. This trend, he says, is driven both by new deals and discounts, and the fact consumers are increasingly moving towards having more than one device each.
"Also contributing to this phenomenon is machine-to-machine applications. MTN in particular has reported strong growth on this front. There may be over a million SIMs in SA that are not owned by people, but are embedded in machines that communicate with other machines - for example Eskom metres and car tracking devices."
IDC analyst Spiwe Chireka says, while MTN has lost a significant number of subscribers, the operator's net additions carry more weight.
Churn in SA, she says, is a typical trend - considering the predominantly prepaid setup.
"When net additions start to decline then operators need to seriously look at their churn. Having said that, the mobile price war has definitely contributed to churn - as has number portability."
One of the most significant changes over the past year, says Chireka, is the widened disparity between operators' flat call rates. This, she says, since Cell C brought in the 99c rate.
"MTN didn't respond, while Vodacom has." Chireka says, while the price war may not have been such a big factor in the past, it has now become a deciding factor.
"It's important for operators to start paying attention to the price war as a driver of churn now, because of the disparity between tariffs. Each operator needs to at least have a competing product."
Knott-Craig says the extent to which competition is able to lower the cost of communication to more South Africans will depend on actions by the Independent Communications Authority of SA in the next months. "Aggressive, proactive and intelligent regulation, with a touch of urgency, which fosters competition, will certainly make communications more affordable to all."
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