Johannesburg - Two years after its launch, Virgin Mobile South Africa's subscribers have almost hit the half-million mark, with the figure expected to rise to 603 000 by the end of the year.
But this is still a minuscule share of the more than 40 million active SIM cards in the local cellphone market.
The company, which launched two years ago amid much fanfare, expects its first profit in the next three years.
Just over a year ago, Virgin Mobile SA (VMSA) - a joint venture between Cell C and UK firm Virgin - had 100 000 customers. Now it has 495 000 customers who spend an average of R216 a month on calls and data.
Virgin Mobile will add about 300 new distribution points, which will be a combination of franchises and partnerships with existing retailers, to target more people.
VMSA chief executive Peter Boyd said yesterday that he was happy about the progress but the company still faced margin pressures.
Steven Ambrose, a director at research firm World Wide Worx, said VMSA had a profitable business model but it had not lived up to the "hype" it had created. It operated in a tough market and did not offer a value proposition that was superior to that of its rivals.
"Our sense is that Virgin Mobile did little to disrupt the market," he said. But he added that its per-second billing was still one of the best deals.
VMSA entered the market with high expectations of taking on MTN and Vodacom. But Boyd said yesterday the company wanted to "be the best, not the biggest".
In other countries, VMSA operates as a mobile virtual network operator (MVNO) - a firm that does not own its network. In South Africa there is no law governing MVNOs, so Virgin operates as an enhanced service provider.
Competitor Altech Autopage has 917 000 customers. Nashua Mobile had more than 671 000 customers in the six months to March.
Boyd said the local market did not understand the MVNO model, which could result in good value for customers. But Ambrose said this model was irrelevant, as many people in South Africa wanted to access only basic services.
VMSA had "not quite hit the sweet spot of consumers", he said.