South Africa Telecommunications Report Q4 2009

Our latest update on the South African telecoms market contains newly revised forecasts for the country's fixed-line and mobile telephony markets. One particularly notable change concerns our 3G forecast, which has been overhauled to take into account new data published by the country's mobile operators.

Meanwhile, in the Data Analysis section of our report, we have incorporated the latest operational data published by South Africa's fixed-line incumbent Telkom SA, as well as the country's two largest mobile operators, Vodacom and MTN.

The latest full set of mobile subscriber figures for all of South Africa's mobile operators relates to the end of March 2009. In the three months ending March 31 2009, the total mobile customer base increased by 3.8% to surpass 51.9mn. Growth in the first three months of the year was weaker than in Q408. However, it was considerably higher than in the corresponding quarter of the previous year. Although growth was driven by an upsurge in the number of prepaid customers at Vodacom, both MTN and Vodacom continue to report healthy growth in the postpaid customer segment. By the end of March 2009, South Africa's mobile penetration rate had risen to 106.9%.

Meanwhile, the latest fixed-line data from Telkom shows that the number of fixed access lines fell by 1.8% in the 12 months ending March 31 2009. Over the same period, Telkom reported a 33% increase in the number of ADSL customers.

In May 2009, it was reported that Vodafone of the UK had completed its US$2.5bn acquisition of a further 15% stake in Vodacom, which was previously held by Telkom. As a result, Vodafone raised its stake in Vodacom from 50% to 65%. On May 18 2009, the remaining 35% interest in Vodacom, which had been held by Telkom, was listed on the Johannesburg Stock Exchange (JSE). Earlier in May, the path was cleared for Vodacom to be listed on the JSE after courts ruled against a move to block the sale by the Communications Workers Union (CWU).

Other notable news from the South African telecoms market includes the inauguration of the SEACOM cable system on July 23. The SEACOM cable, which is 17,000km long, connects Kenya, Tanzania, Uganda, Mozambique and South Africa to Europe and India. It was due to be launched in June but was delayed by pirate activity off the coast of Somalia. South Africa has dropped to sixth position place in BMI's latest set of Business Environment Rankings for Africa. The change of position is mainly the result of a weaker Telecoms Market rating. The lower score in the Telecoms Market category reflects the lower ARPU that was reported by both Vodacom and MTN in Q109. Both operators have reported weaker customer spending, a phenomenon that is related to South Africa's economic slowdown.