Rica gobbles cellular profits

Johannesburg - New regulations are blowing holes in the revenues of the country's biggest mobile operators.

The combined revenue for the South African operations of Vodacom and MTN has shrunk by at least R360m as a result of fewer subscribers since July, when the Regulation of Interception of Communications and Provision of Communication Related Information Act (Rica) came into effect.

The lower subscriber numbers have led to a decrease in the amount subscribers spend a month.

Vodacom, which released its quarterly results this week, said the average spend per customer declined by R10 in the three months to the end of December.

This translates into the company generating R226m less a month - just on prepaid customers. The average monthly spend per contract customer over the same period shrank by R6; a R26m loss.

Vodacom said it shed 1.3 million customers in the three months to December 31 last year.

"The implementation of Rica is the main reason that our prepaid customer base in South Africa as at the end of December fell by 1.3 million customers in comparison to the previous quarter," said Vodacom spokesperson Richard Boorman.

MTN, Africa's largest operator, said on average prepaid customers are spending R10 less a month on air time, which translates to a revenue loss of more than R140m a month.

MTN is in a closed period as it is due to release its annual results in March and therefore could not provide up-to-date numbers.

A note MTN released in October to investors said the local subscriber base declined from 17.2 million at the end of June to 16.4 million at the end of September.

That represented a loss of 800 000 subscribers. The company blamed the significantly lower number of gross connections following the implementation of Rica.

Unlisted mobile operator Cell C hasn't provided details of how much it has been affected, saying "the information is private and confidential".

However, Sue Kennedy, Cell C's executive head of sales and distribution, said since the implementation of the act Cell C's gross activations have dropped by 70%.

The Rica law was introduced mainly to help the police and other law-enforcement agencies track down criminals who use cellphones for illegal activities.

All cellphone numbers in use in South Africa have to be registered by the end of this year. Unregistered numbers will be disconnected from the cellular networks.

The registration progress in the first seven months since the implementation of the law has been lukewarm.

"Rica activities have increased steadily on a weekly basis since implementation. Current Rica events show a 50% split between existing subscribers and new subscribers, which is encouraging as existing subscribers are heeding our call to register," said Kennedy.

Vodacom said approximately one-third of its customer base has completed the Rica registration process. MTN was unable to provide figures on registrations.

- City Press