The cellphone industry was hard-hit by the introduction of the Regulation of Interception of Communications Act (Rica) in July 2009, Cell C said on Wednesday as it released its results for the year ended 31 December 2009.

"The industry was hard-hit by the implementation of Rica... for the first time ever, negative growth was seen in the six months following the implementation of this legislation," CEO Lars P. Reichelt said in a statement.

Rica affected new SIM activations severely, leading to an industry-wide net loss of customers of nearly 3.8 million subscribers in the second half of 2009, the company said.

In similar market constellations the smaller players tended to suffer disproportionately more.

This, however, was not the case with Cell C as Reichelt said the company had grown its customer market share from 13.4 percent to 14.5 percent during 2009.

For the year ending 31 December 2009, Cell C reported an increase of 14 percent in total revenue from R8.6-billion in 2008 to R9.9-billion in 2009.

The underlying service revenues increased by 17 percent year-on-year and this led to earnings before interest, tax, depreciation and amortisation (EBITDA) of R1.4-billion in 2009, an increase of 67 percent from R0.8-billion reported in 2008.

Reichelt said shareholder loans of R6.4-billion were converted to equity at the end of 2009.

"This has improved the company's solvency by reducing debt and increasing equity with an equivalent amount."

According to Reichelt, the industry had experienced significant public and political pressure to reduce Wholesale Mobile Termination Rates.

"Cell C took a stance at a parliamentary hearing in September 2009 and proposed a way forward for the industry as a whole, arguing for a significant reduction of the peak mobile termination rate, a flat all day rate rather than peak and off-peak rates combined with a glide path over three years."

At the end of 2009, the three mobile operators agreed to a voluntary reduction to take effect in March 2010.

"Cell C dropped its standard prepaid tariffs by up to 47 percent in November 2009 ? several months before the voluntary interconnect reduction took effect and was the first and only operator to do so at the time," he said.