Communications Department mulls fourth mobile operator

13 Mar 2003

The Communications Department of South Africa has announced plans to conduct a survey during 2003 to test the feasibility of introducing a fourth player to its mobile market in the future. The department said that the market’s ability to accommodate a new player would depend largely on the state of the country’s economy and therefore it is essential to carry out a test before going ahead with the award of a licence. It hopes that a new player will boost growth in the wireless market, which is expected to level off in the next few years as the operators begin shifting their focus to other African countries.

South Africa’s mobile market is currently home to three cellcos – Vodacom, MTN and CellC – and around 11.06 million subscribers. It has witnessed an exceptionally rapid uptake of GSM services over the last few years and is now one of the largest mobile markets outside Europe. A key factor in the growth has been the popularity of pre-paid services which account for around 85% of total customers. The mobile penetration rate has increased from just 2.4% in 1997 to 26.6% in September 2002, but is still relatively low. The government hopes that the introduction of a fourth player will boost the rate considerably with the launch of new products and services, and cheaper prices. At the end of September 2002 Vodacom was the market leader with 6.56 million customers and a market share of 59% , while MTN could claim a 36% share. Because of the low penetration rate, the market has good potential for growth and a new cellco should be able to gain ground on the existing players reasonably quickly; Cell C was launched in November 2001 and has already gained a 5% market share. If the government’s survey indicates that there is potential for a fourth player in the market, the operator is likely to be launched sometime in 2004.

South Africa
South Africa considering introduction of a fourth cellco to boost penetration rate