MTN heeds the #DataMustFall call

Samuel Mungadze
By Samuel Mungadze, Africa editor
Johannesburg, 20 Mar 2020
MTN SA CEO Godfrey Motsa.
MTN SA CEO Godfrey Motsa.

MTN SA has responded to the Competition Commission (CompComm) to cut data costs by announcing a reduction in its monthly bundles of 1GB and below by 25% to 50%, and the 1GB monthly bundle will decrease by 33% to R99.

The mobile operator will also now be offering lifeline data to its customers, providing subscribers with 20MB of free data daily – or the equivalent of 600MB per customer every month – through its instant messaging platform, Ayoba.

MTN SA says Ayoba currently has 500 000 customers in SA and is expected to continue to scale through the lifeline offering.

“MTN believes that everyone deserves the benefit of a modern connected life and that starts with connectivity. The 20MB Ayoba Data Lifeline will ensure MTN customers are able to communicate with friends and family, every day, even when they are out of airtime. This is the equivalent of 600MB of free data per month, every month,” says Godfrey Motsa, MTN SA CEO.

In December, the CompCom hit MTN and Vodacom with a devastating curve ball, recommending they reduce their mobile data pricing by half.

The competition watchdog, which had investigated the cost of data in the country over two years, presented its final verdict through the Data Services Market Inquiry report, which was scathing to MTN and Vodacom, ordering them to reduce data prices within three months, or face prosecution for exorbitant pricing.

Multi-year agreement

Just over two weeks ago, Vodacom reached a multi-year agreement with the CompCom, promising to substantially reduce monthly data bundles by over 30%, and saving consumers R2.7 billion in data costs.

Effective from April, Vodacom headline data prices will come down by over 30%. For example, the key 1GB monthly data bundle will drop from R149 per 1GB to no more than R99 (including VAT). This represents a 34% price decrease.

Now, MTN SA says from April 2020, MTN will launch the OpenTime service, which will be enable free access to public benefit services.

MTN SA will offer a monthly 500MB free data access to public benefit services Web sites every month, amounting to 6GB per year, for each of MTN SA’s 29 million customers.

MTN currently offers zero-rated data access to a range of Web sites which includes schools and universities.

“These will form part of the broader public benefit Web site service. In April 2020, MTN will extend the Web sites that form part of the public benefit service to also include health, public universities, vocational colleges, educational resources as well as employment sites based on terms and conditions and criteria defined by MTN and after application and approval from MTN,” says MTN.

The carrier says it has developed this set of voluntary undertakings in the form of a social compact to further address the affordability of data services for its customers and “MTN remains in discussion with the CompCom on the options to formalise these elective solutions and the implementation thereof”.

Motsa explains: “Our commitment to driving down the cost to communicate is not new and can be seen in the significant milestones we have achieved over the past three years. These include the dropping of our out-of-bundle rate to just 29c per MB and, just in the past year, a 25% average price drop has been achieved in South Africa.

“Between February 2017 and February 2020, the effective data rate on the MTN network has declined by 76% and it is our intention to continue reducing our prices to the benefit of all our customers.”

MTN has, however, cautioned that while there will be pressure on the telco’s short-term financial performance from these initiatives, it believes the reduction in pricing will be compensated “over time by elasticity and customer growth, and growth in prepaid data service revenue will return in a couple of quarters”.

Spectrum demands

Over and above this, MTN is urging government to release spectrum, saying it is the digital highway upon which “we depend to carry increasing mobile data at more cost-effective prices”.

Motsa says there is significant urgency for the release of 4G and 5G spectrum.

“MTN has invested R50 billion in infrastructure in the past five years, as we have worked to build ourselves out of the spectrum crunch. The lack of spectrum remains one of the more significant barriers to the further reduction in pricing and we look forward to consistent price changes following the release of spectrum.”

MTN says the release of new spectrum in South Africa is urgently needed and will greatly assist our ability to service increased customer demand in a more cost-effective manner.