Registration drive to curb African mobile growth

| Monday June 21, 2010 00:00

Analysts said that mobile operators were set for a short-term hit in revenues as many of Africa's poorer or more remote users struggle to produce the necessary documents and so risk being cut off. A number of African governments are calling on companies to register all their pre-paid mobile phone users, who make up 97-99 percent of the market on the continent, in order to boost national security and help fight phone-related crime.'The introduction of mandatory registration of SIM cards in at least 10 countries has resulted in a dramatic slowdown in subscriber growth and will see the disconnection of millions of unregistered subscribers,' economic forecast group IHS Global Insight said in a report.

South Africa has led implementation of the policy, giving customers until the end of this year to register numbers.Both MTN Group Ltd and Vodacom Group Ltd last year reported falls in users by 6.4 and 4.9 percent, respectively.Drops are expected elsewhere as another nine nations, which include Kenya, Cameroon, Ivory Coast and Ghana, and account for about 80 percent of subscribers in Sub-Saharan Africa, follow suit. Deadlines range from later this month to 2011.'As the registration deadline passes in each country, a significant one-off drop-off is expected as those unregistered SIM cards are deactivated,' IHS said in the March study.The ease with which Africans can get a mobile phone number -- picking up SIM cards and credit cheaply on the street with no need for documentation -- has helped swell official user numbers from just one million in 1996 to around 350 million by the end of 2009, according to the United Nations. But many on the continent have more than one SIM card, mainly to avoid the costs of calling one network from another.Analysts say many of these are likely to be culled.'(Registration) will have an impact initially. People with two cards may end up choosing one,' said Christopher Hartland-Peel, an African equity analyst at Exotix. 'But it will be a short-term issue -- it's going to be like stopping at a red light (and going on),' he added.

Informa Telecoms and Media said a similar move by Algeria in 2008 had hit subscriber numbers. No. 2 operator Mobilis had nearly two million SIM cards de-activated and revenues fell to $140 million in Q4 2008 from $173 million in Q4 2007, it said.

A spokesman for France Telecom, whose Orange unit operates in a number of nations calling for SIM registration, said the policy was 'complicated in the timeframe' but teams were working to minimise the impact on revenues and subscribers.

MTN has said the losses of its pre-paid users had not led to a meaningful drop in revenues in South Africa.'SIM registration is a cost and a hassle but it is not going to affect the companies over time,' said Andre Wilff, a telecoms analyst at Africa Analysis.'It will dent operators' subscriber growth as it is being implemented but they will show growth again. Once it has come and gone, things will go back to normal again,' he said.

Other issues such as negotiations in many countries over higher interconnection rates, increased competition and fees to the government were more of a worry to those firms, he said.Similar schemes have been implemented elsewhere in Japan, Australia, Thailand and Germany. U.S. lawmakers last month unveiled a bill to identify pre-paid users as a way to stop terrorists, drug dealers and gangs from using anonymous numbers.The high percentage of pre-paid SIM card use in Africa means comparisons are difficult to make, but Wilff said research into similar policy moves in Malaysia had showed growth quickly returning after the initial disruption during the process.While African governments say the move will boost security and curb phone-related crime, some fear it will instead be used to monitor and crack down on opposition figures.

But analysts warn that producing documents, ranging from basic identity cards to also needing utility bills in some cases, could prove to be the biggest headache for millions on a continent where so many live in the informal economy. The lack of ability or readiness of people to register their phones on time will curb their ability to communicate and limit newfound user access to money transfer and information services. Tanzania has had to extend its deadline as just 10 million of the estimated 18 million had registered on time. It is not yet clear how strict governments will be in cutting users off.'The problem is that if the process is rushed through as a political imperative it could run against the, goal of universal service,' IHS said.-(Reuters)