2009 South Africa - Telecoms, Mobile and Broadband

South Africa’s telecom sector boasts the continent’s most advanced networks in terms of technology deployed and services provided. Following years of delays with its licensing, the second national operator (SNO) Neotel has finally launched services in competition with Telkom SA and is gaining traction in the market. This, in combination with other sweeping liberalisation measures – also delayed by years – is beginning to change the country’s telecoms landscape fundamentally and bringing prices down.

Under the new regulatory regime, hundreds of alternative service providers are now pushing into the market with converged services. There has been consolidation in the sector which is expected to continue. Key regulatory events shaping the market in 2010/11 will be the auctioning of WiMAX spectrum and the unbundling of the local loop (ULL, or LLU).

The country has a vibrant mobile market that has seen rapid uptake since competition was introduced 15 years ago. With market penetration above 100% and number portability available, the network operators – Vodacom, MTN, Cell C and Telkom SA – are increasingly forced to find innovative ways of distinguishing themselves from the competition in order to gain and retain customers. While emerging as the country’s leading broadband providers, the major mobile operators are also aggressively entering the fixed-line market in a rapidly converging environment.

In addition, the government has created Broadband InfraCo, a national infrastructure company to provide cheap backbone network capacity to service providers. Despite the significantly increased competition between different service providers, many municipalities in South Africa, including the country’s largest cities, are implementing their own fibre and wireless broadband networks.

The arrival of Seacom as the second international submarine fibre optic cable in South Africa in 2009 has brought down the cost of international bandwidth dramatically. Previously, Telkom had been monopolising access to the only major cable serving the country, SAT-3/WASC/SAFE. Several other cables are scheduled to go live in 2010 and 2011.

South Africa’s Internet and Broadband market is finally taking off after years of stagnation due to the expensive operating environment created by Telkom SA’s dominance in the fixed-line and international bandwidth market. Wireless broadband, including WiMAX and 3G/HSDPA mobile data services now rival available ADSL offerings in terms of both speed and price, and consequently subscriber numbers. With its fixed-line network reaching less than 10% of the population, the incumbent has reacted by launching its own 3G network and the country’s first commercial WiMAX service, but various competitors are hard on its heels rolling out the same technology, including second national operator Neotel.

South Africa is also taking a regional lead role in the convergence of telecommunication and information technologies with the media and entertainment sector, promising reductions in telecommunication costs and better availability of information and services. Billions of dollars are being invested into IP-based NGN that are capable of delivering converged services more efficiently.

Telecom carriers and ISPs are moving into delivering audio and video content over their networks, while in turn the traditional electronic media carriers are discovering the potential of their infrastructure for telecommunications service delivery. Digital media and social media have reached a level of development to foster an associated advertising and marketing industry.

Market highlights:

·         2010 estimates for mobile, fixed-line, Internet and broadband market;

·         Mobile penetration has broken the 100% barrier;

·         Decreasing ARPU and increasing churn;

·         More 3G mobile broadband than DSL subscribers;

·         New international fibre links;

·         Profiles of major players in all market sectors;

·         2009 financial results;

·         Online advertising is growing at the fastest rate among all English-speaking countries in the world;

·         More Twitter users than Japan, China, Spain and the Netherlands.

Vodacom South Africa subscribers and market share – 2008 - 2009

(Source: BuddeComm based on Global Mobile, company and industry data)

For those needing high level strategic information and objective analysis on the telecommunications sector in South Africa, this report is essential reading and gives further information on:

·         Government policies affecting the telecoms industry;

·         Market liberalisation and regulatory issues;

·         Telecoms operators – privatisation, acquisitions, new licences and competition;

·         Internet and broadband development and growth;

·         National and municipal fibre rollouts;

·         3G mobile broadband rollouts and market shares;

·         Broadband pricing, fixed and mobile;

·         Average revenue per user (ARPU) and churn.

Data in this report is the latest available at the time of preparation and may not be for the current year.