The mobile price war - instigated by then Cell C CEO Alan Knott-Craig in 2012 and reaching its apex in 2013 - is now in reverse, with two of SA's three big mobile operators already having upped their prices, and MTN likely to follow.
This is according to analysts and comes on the back of a consumer furore over Cell C's and Vodacom's price increases, which the National Consumer Commission (NCC) says it is in the process of investigating as a matter of urgency.
World Wide Worx MD Arthur Goldstuck notes the mobile price war consumers had come to enjoy was not sustainable - a reality manifest in the recent "trend" of increasing prices, but that elicits little sympathy from consumers.
"Mainly, networks were caught by surprise by the extent to which people are reducing their voice usage as they move to data. Mobile termination rates coming down is also a key factor, but most people don't sympathise with them, because they had a great ride, for many years."
While technically and legally consumers do not have a leg to stand on - with price increases being covered in operators' terms and conditions - morally, consumers have a strong basis to go to the consumer watchdog, says Goldstuck. He says the NCC may still be able to get operators to reconsider their price increases, despite disclaimers.
Fully priced
While MTN has yet to introduce price increases, Goldstuck says the operator may well "take advantage of the trend" and do so.
"The difference is, MTN has always been more expensive. It was the last of the operators to bring down prepaid pricing. When others were involved in a price war, MTN resisted and saw a massive decline in their [subscriber] numbers. When they reluctantly brought the price down, to some extent, their numbers recovered to an extent too. But they are still fully priced."
MTN SA marketing chief Larry Annetts says the operator's rates have not increased for over a decade, "despite increasing operational costs, increasing distribution costs, increasing handset prices, rising infrastructure costs, falling exchange rate, and an increase in taxes".
Annetts adds, in the past few years, the operating environment has become increasingly challenging, and MTN had to contend with rising inflation and escalating fuel and electricity prices.
He did not comment on whether MTN has price increases in the pipeline, saying only the operator "strives to remain competitive and will make an announcement at an appropriate time regarding its plans on pricing".
Inflationary pressure
While analysts have pointed out Vodacom's price increases - although relatively small - will have big impact for the operator due to volumes, it says the assertion they will hugely benefit its bottom line is debatable.
Spokesperson Richard Boorman says the increase (roughly 5% on average) impacts about two-thirds of contracts, which make up about half of overall SA service revenue. "Offsetting that you've got cost increases; net impact feels a long way from 'huge impact on bottom line'."
Boorman says, apart from revenue pressures from lower termination rates, inflation, the power crisis and over-the-top players, currency weakness is a big cost factor. "The rand has lost 15% to 20% of its value against the US dollar over the last year or so. That translates into a 15% to 20% increase in the cost of imported equipment."
He says the operator has a range of "cost management programmes" in place, including a hiring freeze, cutting back on staff travel and investigating infrastructure-sharing opportunities. "It's difficult to speculate about the potential for future price increases. First prize is that we are able to absorb inflationary pressures."
Telkom hike
Meanwhile, Telkom has announced it is increasing its line rental fees by almost 14% - from R166 to R189 per month - from May, as part of what it says is the rationalisation of products and services.
"The pricing updates are part of Telkom's rationalisation of products and services. Factors that have influenced these fixed-line rental changes include inflation, along with the access line deficit." Access line deficit is the loss an operator makes on the cost of maintaining the line versus the rental fees it gets from the lines.
Goldstuck says this is a standard industry term used to justify increases in line rental. "But in reality, it's one of the only businesses in the world that justifies this based on base income and not operating income. Telkom does not add the additional usage fees people pay into the equation, which is why there is also little sympathy for their argument."
He notes Telkom has seen an annual drop in subscribers as they migrate to mobile - and as Telkom ups line rental costs - ever since 2000. Back then, the company had about 5.5 million fixed-line users, compared to about 3.6 million now.
The NCC had not responded to queries around the progress of its investigation by the time of publication.
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