SA's number one operator Vodacom is by far the most expensive mobile network in the country for prepaid call tariffs as well as out-of-bundle data.
This is according to the Independent Communications Authority of SA's (ICASA) Retail Tariff Analysis Report 2015. The regulator compiled an analysis report of prepaid retail voice and data tariffs that were available in the market from 1 April 2015 to 30 September 2015.
The purpose of the report is to provide consumers with an analysis of the tariffs charged by the different mobile operators during the period under review.
ICASA says there were mainly three types of prepaid tariff plans that were on offer in the market - flat-rate tariffs that charge the same retail rate for calls to any subscriber; on-net focused tariffs that give subscribers substantial benefits for calling other subscribers on the same network; and dynamic tariffs that offer lower retail prices depending on the time of the day and location.
All flat-rate tariffs are charged on a per-second basis, meaning subscribers only pay for the duration of the call.
According to ICASA, Vodacom charges R1.20 per minute on flat-rate tariffs. The second most expensive is MTN, which charges R0.79; Telkom charges R0.75; and Cell C is the cheapest at R0.66.
Call benefits
The report explains that on-net focused tariffs give subscribers substantial benefits for calling subscribers on the same network. It points out that Vodacom and MTN offered these tariffs. During the period under review, Vodacom offered the 'Daily Free Calls Plan' while MTN offered the 'Talk Free Plan'.
The telcos' on-net call tariff is similarly priced at R1.20. However, when it comes to calling other networks, Vodacom still charges R1.20, while MTN charges R0.79. Furthermore, for a call with a duration of at least three minutes, both networks capped the total charge for a call at R3.60, meaning a subscriber received a benefit of 57 free minutes when making an on-net call, the report says.
Vodacom, at R2/MB, is double the cost of the out-of-bundle rates of MTN and Cell C, at 99c/MB each. Telkom is by far the cheapest, at 29c/MB. The most expensive 100MB data bundle is from MTN, at R35, followed by Vodacom and Telkom at R29, with Cell C at R19.
Although Vodacom is the most expensive mobile network, it still has the biggest subscriber base in SA, with about 31.4 million users under its belt.
Brand loyalty
ICT veteran Adrian Schofield says there is no doubt Vodacom has a massive brand loyalty, following its investment in marketing and the perceptions of its service quality. This is supported by the network coverage, particularly in areas where prepaid customers dominate, Schofield notes.
"In spite of the theory that prepaid consumers can switch networks quickly, to take advantage of a lower price, in practice this is not so," he says.
According to Schofield, the advantage of using the same number over a long period of time outweighs the benefit of switching to another network, and most users will not bother with porting their number to a new service provider.
"It is also becoming the norm that consumers have more than one phone and many will have at least two different service providers. The one that gets the most business will be the one with the best quality and extent of coverage, with price coming second in the purchase decision."
Says Schofield: "In the property business, the mantra is 'location, location, location' and in the mobile game, it has to be 'coverage, coverage, coverage'. Vodacom and MTN have used their critical mass to ensure that they invest in the network - to reach as much of the population as possible and to provide the higher speeds demanded by smartphone users."
He notes Cell C has battled to invest sufficient capital into its infrastructure to equal the coverage and quality of its rivals on a consistent basis. "This means their brand value is significantly lower, so much so that the cheaper prices have little effect."
According to BMI-TechKnowledge telecoms sector specialist, Tim Parle, although the Retail Tariff Analysis Report 2015 is well written and constructed, it is, however, one-dimensional in that it looks at tariffs only.
"ICASA does recognise this. It does not consider other factors such as uptake and churn, which are very dependent on promotions and specials. Although this is recognised in the report, it does not reflect what the average call cost incurred by the consumer actually is. Hence, the findings, although factual, are largely academic.
"I still believe that the average consumer does not have a grasp of what they are actually paying for a call - they couldn't tell you in rands and cents per minute."
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