2013 South Africa - Telecoms, Mobile, Broadband and Forecasts

Publication Overview

This annual report provides a comprehensive overview of trends and developments in South Africa’s telecommunications market. Subjects covered include:

  • Key statistics;
  • Market and industry overviews;
  • Government policies affecting the telecoms industry;
  • Market liberalisation and regulatory environment;
  • Telecoms operators – privatisation, acquisitions, new licences;
  • Major players (fixed, mobile and broadband);
  • Infrastructure development;
  • National and metropolitan fibre rollouts;
  • International submarine fibre optic cables;
  • Mobile voice and data markets, including 3G and 4G;
  • Internet development;
  • Broadband, including 3G mobile;
  • Average Revenue per User (ARPU) and churn;
  • Internet and broadband development and growth;
  • Broadband and mobile data services and pricing trends;
  • Convergence (voice/data, fixed/wireless/mobile);
  • Electronic banking and m-banking services;
  • Digital Media and Digital Economy.

Companies covered in this report:

Telkom SA (Heita, 8ta), Neotel, Vodacom, MTN, Cell C, Virgin Mobile, Broadband InfraCo, Transtel, Eskom, SITA, Sentech, Orbicom, Amobia, Dark Fibre Africa, Seacom, FibreCo, eFive, WASACE, Internet Solutions, Atlantic Internet Services, Business Connexion, Verizon Business, MWEB, Vox Telecom (DataPro), iBurst (WBS, Blue Label), MultiChoice, Goal Technology Solutions (GTS), SmartVillage, Vodacom Business, MTN Business (Verizon Business, UUNet), MWEB, Vox Telecom, Storm Telecom, South African Broadcasting Corporation (SABC), MXit, Naspers, Media24, Standard Bank, First National Bank, ABSA, Nedbank, Barclays Bank.

Reseracher: Peter Lange
Current publication date:- April 2013 (11th Edition)

Executive Summary

South Africa - The continent’s leading telecoms, IT and digital media market

South Africa’s telecom sector boasts the continent’s most advanced networks in terms of technology deployed and services provided. In a virtually saturated voice market, four mobile networks – Vodacom, MTN, Cell C and Telkom SA – are competing for market share in the next growth wave, mobile broadband. 3G/HSPA mobile broadband services now rival available DSL fixed-line offerings in terms of both speed and price, and have consequently taken the upper hand in terms of subscriber numbers. Commercial LTE services (also referred to as 4G) were launched at the end of 2012, delayed by the regulator's inability to allocate frequency spectrum.

While emerging as the country’s leading broadband providers, the major mobile operators are also branching out into fixed services, fibre backbone networks, international fibre connectivity, mobile banking and entertainment in a rapidly converging environment. Fixed-line incumbent Telkom SA has reacted by launching its own 3G mobile network and the country’s first commercial WiMAX service, but various competitors are hard on its heels rolling out the same technologies, including second national operator Neotel.

Following years of delays with its licensing, second national operator (SNO) Neotel is gaining market share in competition with Telkom. This, in combination with other sweeping liberalisation measures – also delayed by years – has changed the country’s telecoms landscape fundamentally and brought prices down. In addition, the government has created Broadband InfraCo, a national infrastructure company to provide cheap backbone network capacity to service providers. Despite the significantly increased competition between different service providers, many municipalities in South Africa, including the country’s largest cities, are implementing their own metropolitan fibre and wireless broadband networks.

Under a converging regulatory regime, hundreds of alternative service providers are pushing into the market with converged services. The legalisation of VoIP Internet telephony in 2005 marked the beginning of a fundamental change in the country’s telecoms landscape. Billions of dollars are being invested into IP-based next-generation networks (NGN) that are capable of delivering converged services more efficiently. Telecom carriers and ISPs are moving into delivering audio and video content over their networks, while in turn the traditional electronic media carriers have discovered the potential of their infrastructure for telecommunications service delivery. Triple play offerings are available that combine voice, data and IPTV services.

Key regulatory events currently shaping the market are the licensing of WiMAX and LTE spectrum as well as 'digital dividend' spectrum (released by the migration to digital terrestrial TV, DTT), the unbundling of the local loop (ULL, or LLU), the staged reduction of interconnect charges, and a review of the broadcasting regulatory framework. The migration to DTT is scheduled to be completed by 2014/15.

All of the major players are involved in various international submarine fibre optic cables that have reached the country in the past few years, despite regulatory hurdles. Following the end of Telkom’s monopoly in this area, the arrival of Seacom as the second international cable in 2009 has brought down the cost of international bandwidth dramatically. A third international cable, EASSy landed in 2010, followed by WACS in 2011. Several additional terabit cables are scheduled to go live in 2014, connecting Africa directly to the Americas.

South Africa’s Internet and Broadband market has finally taken off after years of stagnation due to an expensive operating environment created by Telkom SA’s dominance in the fixed-line and international bandwidth market. The new converged licensing regime has created hundreds of companies licensed to offer Internet services. There has been consolidation in the sector which is expected to continue.

With its relatively well developed and diverse infrastructure, South Africa is also taking a regional lead role in the convergence of telecommunication and information technologies with the media and entertainment sector, promising reductions in telecommunication costs and better availability of information and services. Digital media and social media have reached a level of development that is fostering an associated advertising and marketing industry. The FIFA World Cup held in the country in 2010 has boosted these developments. While South Africa lags behind other countries on the continent in the development of e-government, e-health and e-learning applications, it is a regional leader in the areas of online retail, electronic banking, mobile banking, social media and cloud computing.

Market highlights:

  • First commercial LTE services launched, more to follow;
  • Strong growth in smartphone and mobile broadband adoption;
  • Rapidly growing online retail, online media and internet advertising sectors;
  • Very competitive mobile banking sector;
  • Delayed licensing of LTE, WiMAX and 'digital dividend' frequency spectrum;
  • Major mobile network infrastructure outsourcing deals;
  • Many national and metropolitan fibre network rollouts;
  • Cost of international fibre bandwidth has collapsed since monopoly ended;
  • SNO performance improves while incumbent struggles;
  • New international fibre optic submarine cables planned for 2014;
  • Innovative wireless broadband services amidst spectrum allocation delays;
  • FttH and VDSL2 deployments enable better IPTV and triple play services;
  • Maturing VoIP services are delivering corporate productivity gains and fostering a rapidly growing call centre industry;
  • Switchover to Digital Terrestrial TV (DTT) in 2014/15;
  • Emerging cloud services. 

Estimated market penetration rates in South Africa's telecoms sector – end-2013

Market

Penetration rate

Mobile

151%

Fixed

7.8%

Internet

28%

(Source: BuddeComm based on various sources)

 

Table of Contents

  • 1. Key Statistics
  • 2. Telecommunications Market
    • 2.1 Overview
      • 2.1.1 Fixed-line market
      • 2.1.2 Mobile market
      • 2.1.3 Broadband and Internet market
      • 2.1.4 Digital economy, media and banking
  • 3. Regulatory Environment
    • 3.1 Historical background
      • 3.1.1 Network rollout obligations
    • 3.2 Regulatory authority
      • 3.2.1 Independent Communications Authority of South Africa (ICASA)
    • 3.3 Telecommunications Amendment Bill
    • 3.4 Regulation of Interception of Communications Act 2002
    • 3.5 Electronic Communications Act and ICASA Amendment Bill
    • 3.6 Converged licensing regime
    • 3.7 New Companies Act
    • 3.8 Universal Service and Access Fund (USAF)
    • 3.9 Interconnection
    • 3.10 Registration of subscriber details
    • 3.11 Telecom sector liberalisation in South Africa
      • 3.11.1 Overview
      • 3.11.2 Privatisation of Telkom SA
      • 3.11.3 Third mobile licence
      • 3.11.4 Analysis of the SNO licensing process
      • 3.11.5 Third fixed-line and fourth mobile licence
      • 3.11.6 PTN licences
      • 3.11.7 The ‘Big Bang’
      • 3.11.8 Under-Serviced Area Licences (USALs)
      • 3.11.9 InfraCo licences
      • 3.11.10 Number Portability (NP)
      • 3.11.11 Carrier pre-selection (CPS)
      • 3.11.12 Local Loop Unbundling (LLU)
      • 3.11.13 International gateways
      • 3.11.14 International submarine cables
      • 3.11.15 Least Cost Routing (LCR)
      • 3.11.16 Broadcasting licences
      • 3.11.17 Mobile TV licences
    • 3.12 Spectrum licensing
      • 3.12.1 WiFi
      • 3.12.2 LTE, WiMAX (800MHz, 2.6 and 3.5GHz)
  • 4. Fixed Network Market
    • 4.1 Market overview
      • 4.1.1 Fixed-line statistics
    • 4.2 Fixed network operators in South Africa
      • 4.2.1 Telkom SA Ltd
      • 4.2.2 Neotel
  • 5. Telecommunications Infrastructure
    • 5.1 National fibre infrastructure
      • 5.1.1 Telkom and Neotel
      • 5.1.2 Broadband InfraCo
      • 5.1.3 Dark Fibre Africa
      • 5.1.4 Mobile operators
      • 5.1.5 FibreCo
      • 5.1.6 Fibre to the Home (FttH)
    • 5.2 National private networks
      • 5.2.1 Overview
      • 5.2.2 Transtel
      • 5.2.3 Eskom
      • 5.2.4 Other electricity utilities
      • 5.2.5 State IT Agency (SITA)
    • 5.3 Sentech
    • 5.4 Municipal networks
      • 5.4.1 Knysna – Africa’s first municipal network
      • 5.4.2 City of Tshwane
      • 5.4.3 City of Johannesburg
      • 5.4.4 Ekurhuleni (East Rand)
      • 5.4.5 City of Cape Town
      • 5.4.6 eThekwini (Durban)
      • 5.4.7 Gauteng Link
    • 5.5 International infrastructure
      • 5.5.1 Submarine fibre
      • 5.5.2 South African Power Pool
      • 5.5.3 Satellite
  • 6. Internet Market
    • 6.1 Overview
      • 6.1.1 Internet statistics
    • 6.2 Internet demographics
    • 6.3 Community access projects
      • 6.3.1 Microsoft Digital Villages and telecentres
      • 6.3.2 The Smart Cape Access Project
      • 6.3.3 Intel’s ‘World Ahead’ initiative
    • 6.4 South Africa’s ISP market
      • 6.4.1 Internet Service Providers Association (ISPA)
      • 6.4.2 Selected major ISPs
    • 6.5 VoIP telephony
      • 6.5.1 Market overview
      • 6.5.2 VoIP interconnection and peering
      • 6.5.3 Major VoIP providers
      • 6.5.4 Mobile VoIP
      • 6.5.5 Call centres
  • 7. Broadband Market
    • 7.1 Overview
      • 7.1.1 Broadband statistics
      • 7.1.2 International internet bandwidth
    • 7.2 ADSL
      • 7.2.1 Major retailers
      • 7.2.2 Tariffs
      • 7.2.3 Wholesale
      • 7.2.4 ADSL2+
      • 7.2.5 VDSL
    • 7.3 Wireless broadband
      • 7.3.1 WiFi
      • 7.3.2 WiMAX
      • 7.3.3 EV-DO
      • 7.3.4 Wireless Access Providers Association (WAPA)
      • 7.3.5 MyWireless (Sentech) – decommissioned
      • 7.3.6 iBurst (WBS, Blue Label)
      • 7.3.7 White Space spectrum
    • 7.4 3G and 4G mobile broadband
    • 7.5 Broadband via satellite
    • 7.6 Broadband over powerlines (BPL)
    • 7.7 Next Generation Networks (NGN)
      • 7.7.1 Telkom SA
      • 7.7.2 Neotel
      • 7.7.3 Transtel
      • 7.7.4 Eskom
      • 7.7.5 SITA
  • 8. Digital Media / Digital Economy
    • 8.1 Digital media
      • 8.1.1 Digital TV
      • 8.1.2 Video-on-Demand (VoD)
      • 8.1.3 Personal video recorders (PVR)
      • 8.1.4 Interactive TV (iTV)
      • 8.1.5 Online radio
      • 8.1.6 Online retail
      • 8.1.7 Online advertising
      • 8.1.8 Online media
      • 8.1.9 Social media
      • 8.1.10 E-books, Mobizines
      • 8.1.11 User Generated Content (UGC)
      • 8.1.12 Blogs
      • 8.1.13 Search engines
      • 8.1.14 IPTV, triple play
      • 8.1.15 Broadcasting licences
      • 8.1.16 Broadcast signal distributors
    • 8.2 Digital economy
      • 8.2.1 E-learning
      • 8.2.2 E-government
      • 8.2.3 E-health
      • 8.2.4 Electronic banking
      • 8.2.5 Mobile banking (m-banking)
      • 8.2.6 Online gambling
      • 8.2.7 Cloud services
  • 9. Mobile Communications
    • 9.1 Overview of South Africa’s mobile market
      • 9.1.1 Mobile statistics
      • 9.1.2 Market liberalisation and licence obligations
      • 9.1.3 Community service telephones (CST)
      • 9.1.4 Fixed-mobile convergence (FMC)
      • 9.1.5 Infrastructure sharing
    • 9.2 Regulatory issues
      • 9.2.1 Prices
      • 9.2.2 Interconnection
      • 9.2.3 Handset subsidies
      • 9.2.4 International gateways
      • 9.2.5 Fees and obligations for 1800MHz spectrum
      • 9.2.6 SIM card registration
      • 9.2.7 Mobile Number Portability (MNP)
      • 9.2.8 Quality of service (QoS)
    • 9.3 Mobile handsets
    • 9.4 Major mobile operators
      • 9.4.1 Vodacom South Africa
      • 9.4.2 MTN South Africa
      • 9.4.3 Cell C
      • 9.4.4 Telkom SA (8ta)
      • 9.4.5 Mobile Virtual Network Operators (MVNO)
    • 9.5 Mobile data services
      • 9.5.1 Overview
      • 9.5.2 Mobile data revenue
      • 9.5.3 SMS
      • 9.5.4 MMS
      • 9.5.5 WAP
      • 9.5.6 GPRS
      • 9.5.7 EDGE
      • 9.5.8 BlackBerry
    • 9.6 Mobile broadband
      • 9.6.1 Overview
      • 9.6.2 3G and 3.5G (HSPA)
      • 9.6.3 LTE (4G)
      • 9.6.4 Smartphones
    • 9.7 Mobile content and applications
      • 9.7.1 Push-to-Talk (PTT)
      • 9.7.2 Mobile TV
      • 9.7.3 Mobile music
      • 9.7.4 CellBook
      • 9.7.5 M-commerce
      • 9.7.6 Mobile advertising
      • 9.7.7 Location-based services (LBS)
      • 9.7.8 Manobi
      • 9.7.9 Mobile social media
  • 10. Forecasts
    • 10.1 Forecast – Internet users – 2014, 2017
    • 10.2 Forecast – Broadband subscribers – 2014, 2017
    • 10.3 Forecast – mobile subscribers – 2014, 2017
    • 10.4 Forecast – mobile broadband users – 2014, 2017
    • Table 1 – Country statistics – 2013
    • Table 2 – Fixed-line network statistics – 2013
    • Table 3 – Internet provider statistics – 2013
    • Table 4 – Internet and broadband statistics – 2013
    • Table 5 – Mobile statistics – 2013
    • Table 6 – National telecommunications authorities
    • Table 7 – Telkom SA shareholders of more than 2% and free float – March 2012
    • Table 8 – Fixed lines in service by operator and teledensity in South Africa – 1999 - 2013
    • Table 9 – Telkom SA shareholders of more than 2% and free float – March 2012
    • Table 10 – Telkom SA telephone tariffs – March 2013
    • Table 11 – Telkom SA prepaid fixed lines – 2002 - 2012
    • Table 12 – Telkom SA’s fixed line data revenue and annual change – 2002 - 2012
    • Table 13 – Telkom SA ISDN channels – 2000 - 2012
    • Table 14 – Internet users and penetration rate in South Africa – 1999 - 2013
    • Table 15 – Broadband subscribers in South Africa – 2004 - 2012
    • Table 16 – Telkom South Africa ADSL subscribers – 2003 - 2012
    • Table 17 – Telkom South Africa residential ADSL tariffs – March 2013
    • Table 18 – Telkom South Africa WiMAX subscribers – 2008 - 2012
    • Table 19 – Neotel South Africa WiMAX tariffs – March 2013
    • Table 20 – WAPA South Africa industry survey – 2006 - 2008
    • Table 21 – Sentech MyWireless subscribers in South Africa – 2005 - 2008
    • Table 22 – iBurst subscribers in South Africa – 2005 - 2012
    • Table 23 – Online advertising revenue and annual change in South Africa – 2003; 2006 - 2011
    • Table 24 – South African unique monthly users of Top 10 websites – June 2012
    • Table 25 – Mobile subscribers and penetration rate in South Africa – 1999 - 2013
    • Table 26 – Mobile subscribers in South Africa by operator – March 2012
    • Table 27 – Vodacom South Africa subscribers and market share – 2002 - 2012
    • Table 28 – Vodacom South Africa key statistics – year ended March 2012
    • Table 29 – MTN South Africa subscribers and market share – 2002 - 2012
    • Table 30 – MTN South Africa key statistics – three months ended September 2012
    • Table 31 – Vodacom South Africa broadband subscribers – 2006 - 2012
    • Table 32 – Telkom SA mobile subscribers – 2009 - 2012
    • Table 33 – Forecast Internet users in South Africa – 2014; 2017
    • Table 34 – Forecast broadband subscribers in South Africa – 2014; 2017
    • Table 35 – Forecast mobile subscribers in South Africa – 2014; 2017
    • Table 36 – Forecast mobile broadband users in South Africa – 2014; 2017
    • Chart 1 – Fixed lines in service and teledensity in South Africa – 2002 - 2013
    • Chart 2 – Internet users and penetration rate in South Africa – 2002 - 2013
    • Chart 3 – Availability and cost of international internet bandwidth in South Africa – 2004 - 2012
    • Chart 4 – Mobile subscribers and penetration rate in South Africa – 2002 - 2013
    • Chart 5 – Vodacom South Africa smartphone vs. dongle users – 2006 - 2012
    • Chart 6 – Vodacom South Africa mobile data usage by device type – 2011 - 2012
    • Exhibit 1 – VANS – to self-provide or not to self-provide
    • Exhibit 2 – Large ISPA members – March 2013
    • Exhibit 3 – Spotlight on Vodacom GSM community payphones

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