Rivals close on vodacom

COMPETITION in the cell- phone market from Cell C and Telkom threatens to dislodge Vodacom from its position at the top of the local mobile market.

Still leading the subscriber race with 53percent of the market, Vodacom lost 1,9million users in the year ended March 2010, giving it 26,3million subscribers in SA.

Rival MTN said in March it has 16,1million customers locally after suffering a 6,4percent reduction due to the combined effects of recession and implementation of the Regulation of Interception of Communications Act.

Late entrant Cell C was the only operator to gain ground during the year, adding over 500000 subscribers, bringing its base up to almost 7million subscribers in South Africa.

This has boosted Cell C's market share from 13percent to 14percent while MTN's share remains fairly unchanged at 33percent.

Telkom's planned launch of a mobile service later this year will mean more competition for Vodacom.

Announcing the group's annual results yesterday, Vodacom chief executive Pieter Uys said: "The environment in which we operate is very different to that seen a few years ago, and the steps we have taken to reshape and reposition the group are evident in these results."

Despite the loss of subscribers Vodacom fought to marginally raise subscribers by 0,7percent to 40million across its five operations.

Uys said the company had recently spent R4,6billion on infrastructure upgrades which included a 3G network spanning 3300 sites. However, the company will be looking to tighten operating costs as it brings prices down in line with competition.

While Vodacom and MTN may seem to be losing market share to Cell C, the two giants are well ahead in data offerings, particularly 3G.

Tim Walter, general manager for product and marketing at Nashua Mobile, said: "The mobile industry still has much work to do in terms of driving telecommunication costs down and in terms of making the Internet accessible to more people."

Frost & Sullivan ICT industry analyst Spiwe Chireka said: "Relative to the other two operators in SA, Vodacom has made the most noise about its broadband offerings and this is clearly paying off for them in the mobile broadband segment."