MOBILE-phone operator Vodacom yesterday reported flat first-quarter revenue, as a decline in customers was offset by growth in data traffic.

Vodacom, which is majority owned by Britain's Vodafone, faces stiff competition as global firms increasingly target Africa's fast-growing mobile market.

But that rapid growth has been threatened as a number of African countries now require users to register their cellphones, cutting usage of pre-paid phones.

Vodacom is also being squeezed by a regulatory rate cut in South Africa, its main market.

While Vodacom is the biggest operator in South Africa, it is dwarfed by rival MTN group elsewhere on the continent.

"I'm not really gung-ho about Vodacom going forward," Siza Rafuza, analyst at Metropolitan Asset Managers, said.

"They have all these headwinds coming that they're going to experience now with the regulations . at least MTN has got a spread in terms of other markets." Revenue totalled R14,4billion to end-June, compared with R14,3billion a year earlier.

Vodacom said it had 37,7million customers as of the end of the quarter, down almost 9percent from a year earlier. The company lost 3,3million pre-paid users in South Africa, due to a new policy of shortening contracts for customers who only use their Sim cards to forward calls.

Data revenue rose 43percent, however.

"Looking at the international market, we are seeing the first signs that the days of Africa being the land of 50-percent-plus returns are slowly coming to an end," Spiwe Chireka, an analyst at Frost & Sullivan, said.

Vodacom also faces a threat from India's Bharti Airtel, which plans to spend a total of $1,2billion over the next three years on network upgrades and on investments in Uganda, Zambia, Nigeria and other African countries.

Vodacom said it lost R393million in the quarter after South Africa's communications regulator forced wireless operators to reduce their interconnection fees.