South Africa’s mobile subscriber base grew by 4.8% in the first six months of 2008. Mobile penetration
has now reached 95.9% and, as such, slow quarterly growth rates are to be expected. In Q208, South
Africa’s leading mobile operator Vodacom reported much smaller gains than its main rivals - a mere
6.1% of total net additions. As a result of weak customer growth, Vodacom continued to lose market
share to its main rivals, MTN and Cell C. Cell C appears to have been the real winner in terms of net
additions in Q208. South Africa’s third largest mobile operator gained 490,000 customers in the three
months ending June 2008.
Our new forecast for South Africa’s mobile market predicts that the customer base will increase by over
13% in 2008 and will surpass 50mn by the end of the year, giving a mobile penetration rate of just over
103%. Despite clear evidence that a definite slowdown is currently underway, it should be noted that the
customer base continues to contain a reasonable number of inactive customers.
In addition to raising our expectations for mobile subscriber growth over the next five years, we have also
upwardly revised our predictions for broadband growth. Our new broadband forecast for South Africa
envisages the number of connections rising by over 44% in 2008, enabling penetration to reach 1.5% by
the end of the year. In August 2008, private equity venture SEACOM announced that its undersea cable
linking South Africa to Europe and Asia would be launched in June 2009; this development, along with
the inauguration of several other undersea cables, is expected to help lower broadband costs over the next
few years. Meanwhile, the proliferation of commercial WiMAX services offered by service providers
other than the incumbent Telkom is also expected to lower service costs and increase the level of choice
for customers. In July 2008, South Africa’s second national operator Neotel launched its first commercial
WiMAX wireless broadband services, following the completion of service trials in Gauteng province.
South Africa has dropped to third place in our latest set of business environments rankings for Africa.
Although previously ranked in first place, the recent ascendency of Botswana and Egypt has displaced
South Africa from the top slot.
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