SA’s cellphone market is far from mature and there are still plenty of opportunities for growth. That’s the view of Cell C CEO Lars Reichelt, who was talking to journalists at a media event in Sandton on Wednesday.
Reichelt says competition in SA’s cellular market has been “fairly benign”. “We haven’t really had a lot of competition in this market and I think there is room for more. It’s healthy and a good thing because it keeps you sharp and alert.”
He cites the example of the Austrian mobile market, where there are five operators serving a country of only 8m people. “All of the operators are profitable, with arguably the lowest prices in Europe,” he says. “And every nook and cranny of the country is covered.”
SA is about to get a fourth mobile operator in the form of Telkom, which is building a 2G and 3G cellular network with a view to providing services in 2010. Cell C is also ramping up its investments, and plans to build a high-speed 3G network next year.
Prices have to come down over time. Reichelt says spend on communications in SA as a percentage of GDP is a relatively high 3,8%. In the OECD — a grouping of developed nations — the average is just 1,6%. The average for emerging markets is also well below SA, at 2,5%, Reichelt says.
However, there are barriers to improving the competitive landscape. The biggest of these is the Independent Communications Authority of SA (Icasa), which regulates the sector.
“What really worries me is we have a regulator that is not quite sure what he wants to be,” Reichelt says. “He wants to regulate but he doesn’t know quite what he wants to regulate.”
Reichelt says Icasa too often looks to the UK market, which is badly regulated, instead of drawing inspiration from better-regulated markets in Europe.
“We need some serious, wholesale changes on [the regulatory] front because it is an impediment to competition and an impediment to growing [the market] intelligently,” he says.
Instead of trying to regulate prices, he adds, Icasa ought to be concerned mainly with creating a level playing field for all operators. “Communism has shown that regulating prices … doesn’t work. Creating a level playing field is what makes sense.” — Duncan McLeod, TechCentral
