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Mozambique: Vodacom Claims 40 Per Cent of Mobile Phone Market
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Agencia de Informacao de Mocambique (Maputo)
19 February 2008
Posted to the web 19 February 2008
Maputo
Vodacom-Mozambique (VM), the second cell phone operator in the country, on Tuesday claimed that it has increased its share of the mobile phone market to 40 per cent.
Speaking at a lunch in Maputo with journalists, VM chairman Hermenegildo Gamito said that by January of this year VM had reached about 1.5 million clients - which is well over 40 per cent of the estimated 3.3 million cell phone users in the country.
Vodacom's last published figures were the interim results for the six month period ending on 30 September 2007, and these showed a client base of slightly less than 1.1 million, which at the time was estimated to be 38 per cent of the markets. If Gamito's figures are accurate, the company has added an extra 400,000 clients in four months - a growth in the client base of 36 per cent.
Gamito added that 3.3 million is only 16 per cent of the Mozambican population "from which we may readily conclude that the penetration of mobile telephony in Mozambique is still regarded as rather weak".
He said that VM is working with government bodies "to improve the business environment for mobile telephony, with the aim of allowing greater access to existing services".
A key demand on the government is that it should reduce customs duties on imported handsets. Gamito said that a handset which costs only 20 US dollars in some countries can cost double that amount in Mozambique because of the tax burden.
VM's growth, after only four years in existence, Gamito declared, "shows the effectiveness and success of our work and commitment in providing better quality services at an accessible cost for out clients".
He added that the company has been investing heavily in extending its network "with the best high quality technology available, so as to guarantee greater reliability and access to our products, resulting in greater satisfaction and benefits for our clients".
Gamito also suggested, without ever mentioning the name of the competition, that corporate cell phone users have been switching in droves away from the long-establish state mobile phone company, M-Cel, to Vodacom. "Recently, our portfolio of corporate clients has grown exponentially", he said, "so that today VM holds the largest market share in this segment, because it best knows how to serve its clients".
Gamito announced that VM intends to set up a prize for journalists. The details are still being worked out with the National Union of Journalists (SNJ), but Gamito promised that prize money would be the equivalent of 50,000 US dollars a year.
VM is the Mozambican subsidiary of the South African Vodacom Group, and the Vodacom Group holds 90 per cent of the shares in the company. The Emotel group of Mozambican investors holds five per cent, and a second Mozambican group, Intelec holdings, the other five per cent.
Currently, VM is running at a loss. The losses for the six months up to 30 September were 56 million rand (about 7.4 million US dollars - which was, however, a considerable improvement on the 138 million rand loss of the previous year). Vodacom officials brush this aside, pointing out that it took the group five years to break into profit in its Tanzanian operation.
One Vodacom source told AIM that he thought VM would be making a profit within two years - but in any case, the group, thanks to highly profitable operations in South Africa and elsewhere, has deep pockets, and has every intention of staying the course.
But VM also has problems with what its financial reports admit is a very low average revenue per user (ARPU). This figure fell from 41 rands in 2005 to 27 rands in 2006 and stayed at that level in 2007.
VM also suffers from a very high "churn" or attrition rate - that is, the average number of customers that leave a subscription service during a year (and who, presumably, either switch to another service provider, or stop using cell phones altogether).
For VM, this is an increasing problem - their churn rate rose from 34.5 per cent in 2005, to 41.8 per cent in 2006, to 57.3 per cent in 2007. This is much higher than the churn rates for other Vodacom southern African operations.
It would be instructive to compare this with the M-Cel churn rate - for that would give us a rough idea of how many clients are switching from M-Cel to VM and how many are going in the other direction. But we cannot make the comparison, because M-Cel has not made the information public.
Whereas the Vodacom website is full of figures, with very detailed financial statements, M-Cel's is barren of such useful information.
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M-Cel has released figures on its net profits - 12.3 million dollars in 2006, up from 7.2 million in 2005. Vodacom sources, however, allege that M-Cel benefits from hidden state subsidies, an allegation that will grow in credibility if M-Cel does not make more financial information publicly available.
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| Copyright © 2008 Agencia de Informacao de Mocambique. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections -- or for permission to republish or make other authorized use of this material, click here. | |||||||||||||||||||||||||||||
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