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<\/div>\nTelecom giant, MTN, is in talks to buy South Africa\u2019s incumbent operator, Telkom.<\/p>\n
As South Africa\u2019s second- and third-largest mobile operators, if approved the deal would alter the competitive dynamics of the market substantially and would effectively create a duopoly in a market that currently benefits from a healthy level of rivalry between operators.<\/p>\n
In the mobile segment, MTN\u2019s position would improve dramatically.<\/p>\n
Using the latest data (quarter 1, 2022) available from the operators, Fitch Solutions estimate that MTN\u2019s market share would increase to 48.4% with the acquisition of\u00a0Telkom\u2019s 16.94 million subscribers it reported for the year ending March 2022. This would transform MTN into South Africa\u2019s dominant operator, usurping the position of current market leader\u00a0Vodacom.<\/strong><\/p>\n <\/p>\n \u201cWe estimate its market share currently sits at around 36.8%. As a result, South Africa\u2019s mobile market would effectively approach duopoly status, with smallest MNO\u00a0Cell C\u00a0and the MVNOs unable to engage in meaningful competition with the primary players\u201d, it added.<\/p>\n Demand for Telkom\u2019s mobile services have shown consistent growth since the telco re-entered the mobile segment in 2010, and it was the only operator not to have recorded subscriber losses during the Covid-19 pandemic.<\/p>\n Telkom\u2019s aggressive pricing strategy has served its growth accordingly and allowed it to secure subscribers at the expense of the other market players. Exposure to Telkom\u2019s growth trajectory could reverse the volatile trend of customer acquisition and retention that MTN has faced over recent years.<\/p>\n MTN would also gain access to Telkom\u2019s spectrum holdings, the primary appeal here being the latter\u2019s 22MHz of spectrum in the 3.5GHz band that it acquired during the\u00a0long-awaited 5G spectrum auction that occurred in March 2022.<\/p>\n Spectrum in the 3.5GHz band is critical for deploying 5G, Fitch Solutions said, and is therefore key to generating additional value in mobile operations, particularly at a time when robust competition has been driving down ARPUs.<\/p>\n Moreover, collecting Telkom\u2019s spectrum would also give MTN superiority in terms of overall spectrum holdings after Vodacom emerged from the auction as the biggest spender.<\/p>\n <\/p>\n