Rica takes its toll on MTN

Johannesburg - Cellular provider MTN's South African subscriber base fell by 5% over the past quarter as a consequence of the implementation of the Regulation of Interception of Communications and Provision of Communication-Related information Act (Rica), the group said.

Since July 1, cellphone companies were prohibited from activating a new Sim card unless they had captured and verified the customer's cellphone number, full name, identity number and address.

"The main reason for the movement is the significantly lower number of gross connections following the implementation of Rica," MTN said in a statement.

The group said it has always been able to surpass the number of subscriber cancellations with new connections, but that it was not able to do so in the third quarter. It downgraded its annual subscriber growth forecast to zero for 2009, and warned it may even find it difficult to reach this revised figure.

However, MTN expected to gain over 22 million subscribers this year across all the territories it operates in.

Cadiz African Harvest Asset Management's Mark Ansley said MTN's decline in subscriber numbers was in line with market expectations. "This goes to show that the South African cellphone market is reaching a level of maturity. It's starting to grow backwards," he said.

Ansley said the loss in subscriber numbers will put MTN's revenue under pressure, but all cellular providers will experience the same effect.

Seeking growth elsewhere

He said cellular providers are looking to grow in other markets. Vodacom, under its parent company Vodafone is restricted to sub-Saharan Africa, whereas MTN is free to grow into other African markets as it is already doing.

Frost & Sullivan ICT industry analyst Spiwe Chireka had a similar impression of the announcement. "There is no need to be too concerned about this. It is clearly an effect of the implementation of Rica," he said.

Chireka said when prepaid subscriber registration was introduced in Senegal in 2007, Sonatel - the market leader there - lost 6% in subscriber growth numbers.

"Therefore, it's quite predictable that we should expect the same trend in South Africa. In Senegal, the operators have since recovered. However, operators there have struggled to regain their previous growth levels and this may be expected locally as well," Chireka said.

MTN recorded a 5% increase for the quarter in subscribers across the group. The Middle Eastern operations contributed to a great extent to this, with a 9% subscriber increase.

This was largely due to continued growth from the Iran operation, which contributes 62% to the region's subscribers and increased its base by 8% to 20.7 million.

- Fin24.com