MTN 'already offers most affordable rates'

Second cellphone operator MTN has turned its nose up at the significant prepaid pricing cuts announced yesterday by Vodacom and Cell C, saying it still offers “the most affordable prepaid experience” in the market.

Vodacom and Cell C have slashed their prepaid rates, each coming out with 99c per minute deals that will be available to their respective prepaid markets as of Sunday. Vodacom's new prepaid product, “Freedom 99”, allows customers to make off-net, anytime calls for 99c per minute. Cell C's “99 Cents For Real” deal offers the same, with per-second billing from the first second.

Industry observers say the recent developments signal a renaissance in the telecommunications pricing war that has for years been somewhat latent.

But MTN does not appear swayed by what has been called the most significant step towards lower call costs in a decade - stating that it “maintains prepaid pricing leadership”. The operator asserts its customers “can rest assured [MTN's] prepaid tariffs remain the most affordable in the market”.

In light of this, says Taukobong, Vodacom and Cell C's new pricing “would be uncompetitive, based on [MTN's] customers' current usage”.

MTN further maintains pricing plans that charge a per-minute rate are not in the best interest of its customers. “Most calls last less than a minute. All of MTN's price plans have true per-second billing, so customers do not have to pay for what they don't use.”

World Wide Worx MD Arthur Goldstuck says that, while Cell C is indisputably offering the clearest structure and value proposition, and that its prepaid calls work out to being the lowest priced in the market, “the complexity of rival products does mask some outstanding value”.

However, he says, that value is only able to be realised when customers understand and actively use the low-priced options. “For example, Vodacom offers free calls between midnight and 5am. For those who don't use it, it is meaningless. For those who do, it is a huge benefit. The same applies to MTN's Zone plan: you have to understand it and know when to use it on the one hand and be an active user on the other.”

Goldstuck says the problem with MTN's Zone plan is the industry price structures in general. “You need a calculator to figure it out, and a lawyer who can speak 'people' to translate the terms and conditions.” He says, although the penalties for using the plan incorrectly are huge, the benefits of using it “to the letter” are equally huge.

Goldstuck predicts this weekend will see the full extent of the “price war” taking shape in the media.

“I suggest consumers watch the Sunday papers this weekend. That is where the full extent of the price war will become visible, and committed to print and very large headlines across double-page advertisements. The number 99 will feature strongly, but so will numbers showing the cost savings you get on other networks.”

He says, in this vein, Cell C CEO Alan Knott-Craig will have achieved exactly what he set out to do, namely shake up the market. “However, what will cause unease for other networks is that this is clearly only his first move. The prepaid market, with more than 40% churn a year, is where market share is to be had, but the contract market is where the biggest per-customer revenue is generated.”

Vodacom and Cell C's pricing cuts are an important step towards lower call costs, says Goldstuck, “in fact the most significant in a decade”.

“The mass market didn't feel the impact of the cut in interconnect fees, but it will certainly feel the impact of these cuts. The contract market will be waiting in anticipation for similar cuts to call rates in general.”