A major disconnection of inactive subscribers by market leader Vodacom meant that the South Africanmarket, based on reported subscriber figures from the country’s operators, actually declined during thethird quarter of 2007. Vodacom discounted 2.9mn inactive prepaid accounts from its network, resulting innegative growth for the operator and a drop in its market share to 55%. However, we agree with theoperator that the move will give a more accurate picture of the size of the market and indeed, we hopethat Vodacom’s decision will encourage South Africa’s other operators to do the same. Despite themarket not growing during the quarter, based on the strong growth that was reported in the first half of theyear, we still believe that customer numbers will have hit our 44.8mn target by the end of 2007, pushingpenetration up to almost 95%. Moving forward, growth will undoubtedly slow, although there areencouraging signs from Vodacom in particular that demand for 3G and data services is increasing, whichbodes well for ARPU growth.
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