{"id":46176,"date":"2013-09-19T10:06:50","date_gmt":"2013-09-19T08:06:50","guid":{"rendered":"http:\/\/businesstech.co.za\/news\/?p=46176"},"modified":"2013-09-19T10:35:51","modified_gmt":"2013-09-19T08:35:51","slug":"is-there-space-for-cell-c-and-telkom-mobile","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/mobile\/46176\/is-there-space-for-cell-c-and-telkom-mobile\/","title":{"rendered":"Is there space for Cell C and Telkom Mobile?"},"content":{"rendered":"

The\u00a0increasing\u00a0competition in an increasingly saturated mobile space in South Africa is forcing a\u00a0squeeze\u00a0on profitability, while operators clamor for each others’ customers.<\/p>\n

Industry\u00a0incumbents\u00a0MTN<\/a> and Vodacom<\/a> have both seen growth slow down quite\u00a0dramatically\u00a0in SA in recent reporting periods, while both firms have reported decline in local customers.<\/p>\n

Vodacom currently leads in SA in market share, followed by MTN – while Cell C<\/a> has recently upped its growth substantially, with Telkom Mobile<\/a>, at last count (31 March 2013)\u00a0at only 1,534,265 active mobile subscribers, up a modest 3.4% from a year earlier, given its low base.<\/p>\n

The head’s of the four leading mobile operators in South Africa, namely Vodacom, MTN, Cell C, and Telkom Mobile, have given their views on whether there is space for\u00a0four players in the SA landscape.<\/p>\n

Subscribers (Millions) and Market Share<\/h3>\n
\n\n\n\n\n\n\n\n\n
Operator<\/strong><\/td>\n2011
\n<\/strong><\/td>\n		Market Share
\n<\/strong><\/td>\n		2012
\n<\/strong><\/strong><\/td>\n		Market Share<\/strong><\/strong><\/td>\n2013
\n<\/strong><\/strong><\/td>\n		Market Share<\/strong><\/td>\n<\/tr>\n
MTN<\/td>\n20.9<\/td>\n33.6%<\/td>\n24.5<\/td>\n37.3%<\/td>\n25.0<\/td>\n36.8%<\/td>\n<\/tr>\n
Vodacom<\/td>\n31.7<\/td>\n50.9%<\/td>\n29.97<\/td>\n45.6%<\/td>\n29.28<\/td>\n43.0%<\/td>\n<\/tr>\n
Cell C<\/td>\n8.2<\/td>\n13.2%<\/td>\n9.4<\/td>\n14.3%<\/td>\n11.7<\/td>\n17.2%<\/td>\n<\/tr>\n
Telkom Mobile\/8ta<\/td>\n1.14<\/td>\n1.8%<\/td>\n1.48<\/td>\n2.2%<\/td>\n1.54<\/td>\n2.3%<\/td>\n<\/tr>\n
Virgin Mobile<\/td>\n0.3<\/td>\n0.5%<\/td>\n0.4<\/td>\n06%<\/td>\n0.5<\/td>\n0.7%<\/td>\n<\/tr>\n
Total*<\/strong><\/td>\n62.24<\/strong><\/td>\n100%<\/strong><\/td>\n65.75<\/strong><\/td>\n100%<\/strong><\/td>\n68.02<\/strong><\/td>\n100%<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table><\/div>\n

Vodacom<\/strong><\/p>\n

Vodacom\u00a0\u00a0CEO,\u00a0Shameel Joosub<\/a> said: “The mobile business is highly capital intensive. New entrants would need to invest extremely large sums (we\u2019ve spent R28 billion in South Africa in the last five years) in order to build a network.”<\/p>\n

He said that, with a limited customer spend available, the number of operators that a market can support is also limited.<\/p>\n

“Typically we see efficient markets supporting in the region of three to four operators, but it\u2019s important that these competitors have the requisite funding in order to compete effectively.”<\/p>\n

\"Shameel<\/a>

Shameel Joosub<\/p><\/div>\n

MTN Group\u00a0<\/strong><\/p>\n

MTN Group CEO\u00a0Sifiso Dabengwa<\/a>\u00a0said in August that there\u00a0is no room in the local market for a profitable fourth player.<\/p>\n

\u201cI don\u2019t think there is space for four (operators in South Africa), Dabengwa said, adding that, amid increased saturation, \u201cconsolidation has to happen\u201d.<\/p>\n

The company lead said that, in discussion with regulators across numerous markets and territories, it has become clear that \u201csome players are going to fall by the wayside\u201d.<\/p>\n

He said further that in some markets where the fourth, fifth or sixth, player will never deliver returns, \u201cthey start doing very destructive things in the market in the hope that it will improve their position\u201d.<\/p>\n

\"Sifiso<\/a><\/p>\n

Cell C<\/strong><\/p>\n

Despite Cell C’s recent market share gains,\u00a0CEO\u00a0Alan Knott-Craig<\/a>\u00a0believes that the local market is not conducive for four profitable mobile operators.<\/p>\n

He said in July\u00a0that it was probably too late, by as much as seven years, to have a fourth operator in SA.<\/p>\n

Knott-Craig said that an ideal situation would see four operators each with a market share of 25%; however, that isn\u2019t the case.<\/p>\n

Speaking in a television interview last month, the industry veteran opined that, in general, South Africa has never been good at regulating the telecommunications space.<\/p>\n

\u201cEssentially it goes around MTRs (mobile termination rates)\u2026and the second thing is symmetry,\u201d he said, adding that while regulators did it with\u00a0MTN\u00a0and\u00a0Vodacom\u00a0until only recently, the same did not apply for 8ta (now\u00a0Telkom Mobile) or Cell C when they came into the market as a third and fourth operator.”<\/p>\n

\u201cThese two operators, for that reason, never got off the ground,\u201d he said.<\/p>\n

\u201cThe reason why you licence a third and fourth operator when you are heading toward 100% saturation anyway, is only to get prices down.”<\/p>\n

“If you don\u2019t make it possible for them to be financially sustainable in taking market share from other operators \u2013 which is the only way prices come down anyway \u2013 then don\u2019t do it; don\u2019t license them and be happy with the status quo.\u201d<\/p>\n

\"Alan<\/a>

Cell C CEO, Alan Knott-Craig<\/p><\/div>\n

Telkom Mobile<\/strong><\/p>\n

When BusinessTech addressed the question to Telkom Mobile’s\u00a0Attila Vitai<\/a>, the group simply stated: “Telkom Mobile believes that as the fourth entrant in this industry we have been a catalyst for much needed competition.”<\/p>\n

\"Attila<\/a>

Attila Vitai<\/p><\/div>\n

More news on South Africa’s mobile landscape<\/h3>\n

No space for 4 mobile players in SA: Knott-Craig<\/strong><\/a><\/p>\n

MTN CEO warns \u201cdestructive\u201d rivals<\/strong><\/a><\/p>\n

Cell C\u2019s Knott-Craig warns backers may stop investing<\/strong><\/a><\/p>\n

\u00a0Half of SA mobile users would change their operator<\/strong><\/a><\/p>\n

Mobile subscribers in SA: who\u2019s eating whose lunch?<\/strong><\/a><\/p>\n

25% market share achievable: Knott-Craig<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The chief executives of the four mobile operators in South Africa give their verdict on whether the local landscape can accommodate four profitable players. <\/p>\n","protected":false},"author":9,"featured_media":27136,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"idle","_sma_x_autopost_error":"","_sma_x_post_id":"","_sma_x_attempts":0,"footnotes":""},"categories":[34],"tags":[43,5083,42,26,28,3403,1890,1075,27],"class_list":["post-46176","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mobile","tag-alan-knott-craig","tag-attila-vitai","tag-cell-c","tag-headline","tag-mtn","tag-shameel-joosub","tag-sifiso-dabengwa","tag-telkom-mobile","tag-vodacom"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/46176","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=46176"}],"version-history":[{"count":25,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/46176\/revisions"}],"predecessor-version":[{"id":46260,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/46176\/revisions\/46260"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/27136"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=46176"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=46176"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=46176"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}