 South Africa: Telecoms and Technology background
FROM THE ECONOMIST INTELLIGENCE UNIT
The South African telecommunications and technology markets are well developed for an African country. The sector is dominated by Telkom, which enjoys its monopoly of the fixed-line market after partial privatisation in 2003 and ownership of half of Vodacom, a mobile-phone provider.
There has been a major shift in the voice telephony market, from fixed-line to mobile sub-scriptions; the current mobile base is three times the size of the fixed-line market. Although the country’s fixed-line penetration rate in the region is 10.9%, the rate falls to around 3% in South Africa’s non-white households, just above the regional average of 2.6%.
South Africa ranks first in Africa and 17th in the world in terms of the number of mobile-phone users. In addition, the use of mobile phones has enabled a greater service to rural areas at a lower cost than that of installing fixed lines.
Telkom call costs are very high: a recent study by NUS Consulting found that, of 14 countries investigated, Telkom charged the highest international call rates, 63% higher than Finland, which was the next most expensive country.
The demand for mobile telephony is booming. At 45.1 mobile subscribers per 100 population in 2004, South Africa has one of the highest penetration rates in developing countries. This growth in mobile telephony has yielded over 14m mobile-phone users, compared with 5m fixed-line subscribers, and generates around US$2.4bn in revenue per year.
The chief driver has been the prepaid sector, which now accounts for over 85% of all users. Computer literacy in South Africa is low, but is an area of growth.
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SOURCE: The Economist Intelligence Unit
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