South Africa’s newest mobile operator Cell C, which was the third player to enter the market when it launched commercial services in November 2001, has requested that the regulator, the Independent Communications Authority of South Africa (ICASA), declare the country’s two more established wireless services providers Vodacom and Mobile Telephone Networks (MTN) as dominant players, in a move which, if successful, could cost its larger rivals significant sums of money in lost revenues. Under the terms of ICASA’s Supplementary Interconnection Guidelines published in December last year, ‘dominant’ is defined as having a market share of at least 35%. Operators which fall into this category are liable to provide essential services, such as interconnection, at cost price, which could have a detrimental effect on Vodacom and MTN’s revenues if Cell C gets its way. As at 30 September 2002, Vodacom claimed a 59% share of the market with 7,159,672 subscribers, followed by MTN with 4,284,000 or 35%, leaving Cell C trailing in third with 740,000 customers, or a 6% share. The two larger companies will now have to convince ICASA that they are not dominant or face a negative impact on their annual revenues. In 2002 Vodacom collected ZAR4.3 billion in interconnection fees, or roughly 25% of its total revenues of ZAR16.3 billion, while MTN is estimated to have garnered interconnect fees of roughly ZAR2.5 billion. The two have been invited to submit feedback by 15 May and public hearings will take place three weeks later.
South Africa has seen exceptionally rapid uptake of GSM services in recent years and is now amongst the most important mobile markets outside Europe. In 1993 two GSM public land mobile network (PLMN) licences were issued to operators MTN and Vodacom. In November 2001 Cell C commenced operations as the third mobile network operator, initially leasing Vodacom’s infrastructure; it expects to build a total of 2,000 base stations nationwide by the end of 2003 costing an estimated USD240 million. However, problems acquiring sites have caused delays and the 1,500 base stations due to have been on air by the end of 2002 will now only be reached during 2003; as of the fourth quarter 2002, only 524 base stations were deployed. Most efforts are currently directed at establishing stations using the 1800MHz frequency in urban areas where Cell C is to stop using Vodacom infrastructure by November 2004 (Gauteng, Cape Town, Durban, Bloemfontein, and Port Elizabeth). More than 70% of Cell C’s traffic is carried at 900MHz by Vodacom. Cell C is wholly owned by 3C Telecommunications, which in turn is 60% owned by Oger Telecom South Africa, a division of Saudi Oger, and 40% by CellSAf, a black empowerment organisation. As of November 2002, Cell C had exceeded its targets, achieving 975,000 pre-paid and 5,000 post-paid subscribers.