Vodacom eats into MTN base

SA's largest cellular operator Vodacom has grown its market share 3% since December, while rival MTN is losing subscribers.

Vodacom this morning released its maiden interim results, and said South African subscribers were up - despite the recent implementation of the new SIM card registration Act. The mobile operator says it added just over 579 000 subscribers in the six months to September.

The company now has 55% of the local market, a 3% gain since December, when it had 52%, according to its pre-listing statement. SA is Vodacom's largest market and accounts for the bulk of its income.

While Vodacom has increased its numbers to 28.2 million subscribers, MTN says it was hit by the newly-implemented Regulation of Interception of Communications and Provision of Communication-Related Information Act (RICA), showing a decline of 4.7% in the South African base.

Despite its growth, Vodacom is also concerned the Act will impact its subscribers, already having stunted growth over the period. RICA's implementation started in July, with a grace period of a month.

All network users need to be registered by August next year. However, Uys says the company is in constant communication with government to mitigate the effects on both the industry and the economy. “The current Act has a checkpoint built into it, and we will be meeting with government early next year to see where we are and how to manage the impact.”

He says many other countries that have implemented a similar Act have had the deadline dates postponed in an attempt to prevent a downward turn for the economy and industry. Uys did not indicate whether the company would suggest a similar strategy for the South African industry.

While gross connections during the half-year amounted to 5.6 million subscribers, Vodacom says it saw lower gross connections in August and September.

Average revenue per user (ARPU) was impacted by the recession. While price promotions dropped average revenue per minute by 14.6%, these specials did result in traffic growth of 15.7%.

ARPU in the prepaid sector was down 3%, to R64, while revenue per user in the contract market dropped 6%, to R452. Total local revenue increased 6.8%, to R24.4 billion, and operating profit grew 11.1%, to R8.6 million, off the back of an operating margin that expanded from 34% to 35.3%.

Total group revenue grew 9.9%, to R28.7 billion, and the company now has a total of 41.6 million customers.