Vodacom sees subscriber growth

By Damaria Senne, ITWeb senior journalist

Johannesburg, 19 Jul 2007

Vodacom saw a 7.5% increase in subscriber numbers across all its networks in the 31 March to 30 June period.

This comes amid strong competition in the South African mobile market. Market watchers say the single-digit growth is also a strong indicator the South African market is fast reaching saturation.

Vodacom says it recorded 32.4 million subscribers across all its networks in SA, Tanzania, the Democratic Republic of the Congo, Lesotho and Mozambique as at 30 June.

"The growth in the customer base is a result of high gross customer connections of 4.4 million for the quarter," the company says in a media statement.

Year-on-year revenue for the quarter ended 30 June increased by 18.6%, while total group customers increased by 28.4% since June last year, it says.

Strong local competition

The mobile operator says its local customer base grew 6.9%, to 24.6 million customers, in the March to June quarter, despite an increasingly competitive market.

Vodacom SA's customer base is made up of 3.2 million contract customers and 21.3 million prepaid customers. The average revenue per user (ARPU) for contract customers dropped from R517 to R488, while prepaid ARPU dropped from R63 to R58.

Vodacom says the SIM card penetration of the local cellular industry is now an estimated 89% of the population.

The mobile operator says it retained its estimated market share of 59%.

However, World Wide Worx director Steven Ambrose says Vodacom is overstating the market. He notes the numbers do not take into consideration subscribers who purchase SIM cards for their value and then discard them. A recent survey showed Vodacom had closer to 49% of the mobile phone market share, he says.

Ambrose's estimate tallies with MTN and Cell C's estimated market share. MTN previously said it holds 40% of the local market share, while Cell C said it held a 10% share.

Good health

BMI-TechKnowledge senior analyst Richard Hurst says Vodacom is showing healthy growth, considering the market conditions it operates in. The South African cellular market is nearing saturation, and becoming increasingly difficult to penetrate, he says.

Ambrose says it will be especially difficult for Cell C to see strong growth. "Their prognosis is not good - they missed the boat when it comes to strong growth and will have to steal customers from Vodacom and MTN."

However, he points out that the situation is not bleak for Cell C. "The good thing is that the vast majority of mobile subscribers are on 'pay as you go', so they can port very easily."