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South African pre-paid users rush to sign up as contract customers hold back

By unknown | Aug 30, 2007 | COMMENTS [ 0 ]

Zweli Mokgata

Zweli Mokgata

MTN seems to be gaining on Vodacom in the pre-paid market, but losing in the contract market where Vodacom has been quicker to roll-out wireless broadband.

Subscriber numbers in the 21 countries MTN operates cellphone networks grew 20percent to more than 48million since December, MTN's interim results for the six months ended in June showed.

South African subscribers grew 7percent to 13,4million. MTN chief executive Phuthuma Nhleko said much of this growth came from attracting pre-paid users by offering lower denomination vouchers.

Pre-paid users account for 82percent of MTN's domestic customer base. The average revenue per user of its pre-paid customers decreased to R87 in June from R94 in December. Despite this decline, MTN still beats Vodacom's pre-paid user average of R58 a month.

In the contract market, however, Vodacom averages R488 while MTN posted a decline to R435 from December's R487. While MTN has invested in expanding into Africa, Vodacom has focused on keeping its lead in the domestic market by being first to market with wireless Internet access technologies.

An impending competition tribunal hearing over R200million in interconnection fees with Cell C has cast a shadow over MTN's South African ambitions.

The group's total revenue increased by 69percent to R34billion. Most of this growth came from outside South Africa where revenue rose 15percent to R13billion. In Nigeria, revenue grew 51percent to nearly R10billion.

Renaissance specialist funds portfolio manager Khulekani Dlamini said that the MTN results were better than expected.

"The market was expecting R3,11 in earnings per share for the half and the company delivered R3,25," he said.


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