With SA's mobile operators now mostly on a level playing field in terms of pricing, the mobile price war that started around the second quarter of 2012 is about to enter a new phase - the battle of value.
This is according to industry observers and comes in the wake of a price war - mainly on the prepaid voice front - between Vodacom, MTN, Cell C and Telkom Mobile. As it stands, prepaid customers can get a 79c per minute tariff from Vodacom, 60c per minute rate from MTN, 66c per minute from Cell C, and 75c per minute for off-net calls from Telkom Mobile.
Prepaid voice prices are at an all-time low, with MTN this week introducing 1c per-second calls - a three-month promotion available for MTN prepaid and top-up customers. Last month, Cell C upped the ante with a new prepaid package priced at 66c per minute and post-paid packages priced at 79c per minute. MTN had taken the price lead in March, but was soon followed by its main rival Vodacom.
Transitioning war
Independent telecoms analyst Spiwe Chireka says SA is now entering into "the battle of value-added services (VAS)" - with prepaid voice remaining the killer service and the consumer standing to emerge as the ultimate winner.
"Mobile operators are hustling to keep their customers, especially now that the pricing between all the operators is more or less on par, and we can expect to start seeing more products that offer added value."
She says Cell C and Telkom Mobile are currently offering the most compelling value-add services when it comes to prepaid voice, with products that give customers immediate and transparent airtime value when recharging. Vodacom still has a system whereby customers earn points (when recharging) that can be redeemed for various services at a later stage.
"We are likely to see new products that give customers more immediate value when recharging, as well as existing products tweaked or becoming more widespread. We can definitely expect a tweak in Vodacom's prepaid system and perhaps something from MTN in terms of VAS in the prepaid space."
Role change
MTN, which has in the past been the last to fire back in the price war, has surprised the industry of late - although analysts say the operator is doing this out of sheer desperation to hang on to existing customers and claw back some of the ground it lost due to competition heating up. Cell C, meanwhile, has quietened down in comparison to the aggressive stance it took when Alan Knott-Craig took the helm - something analysts say could be due to the current leadership transition.
Ovum analyst Richard Hurst says while there may be some shifting of roles, the larger players are more able to adopt these policies or stances in the price war than the smaller players. "But the issue is that they still tend to come off looking like dominant players, with consumers questioning why these price changes are being implemented as more of a reaction to the smaller players' initiatives."
Chireka notes that, while MTN has woken up and is now firing back on the price front, the operator still has a reactive - rather than proactive - mentality. Cell C, on the other hand, is still seen as the first mover and instigator.
Hurst says, while operators that have experienced subscriber attrition will be able to claw back customers, the challenge remains the fact that the market is becoming more competitive. "Operators now realise that they need to add a lot more value over and above purse voice and messaging services."
Chireka says the war will still play out in the voice realm for some time to come. "While data offerings are good at increasing operators' revenue, voice seems to be the hook for customers. We are not done yet with voice. It is still a critical service - especially in a country like SA.
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