Vodacom is "comfortable" with the Independent Communications Authority of South Africa's (ICASA's) newest regulations to do with out-of-bundle (OOB) data billing, but says the changes will likely make a significant impact on the telco's revenue going forward.
The amendments to the End-user and Subscriber Service Charter Amendment Regulations will next month make it necessary for users to opt-in to OBB data billing once bundles have been depleted. This will effectively put an end to the practice of customers being automatically changed over to OOB rates, which are significantly higher than in-bundle rates, and will reduce bill shock.
"I wouldn't say we are pleased, but I think we are comfortable. Because I think in the end it was probably a fair outcome," Vodacom group CEO Shameel Joosub, told ITWeb in an interview.
ICASA gazetted the regulations on 7 May and they will come into force on 8 June. The original draft regulations were first published in August 2017 to amend regulations of the same name gazetted in April 2016, with a second draft published in November 2017.
"We are comfortable that ICASA has taken into account the hearings [as part of the consultation process] and came up with a consumer-friendly approach, but at the same time also took into account the comments that we made. Especially, our big thing was that the daily and weekly bundle offerings would have had a massive impact on customers if that was changed," he said.
ICASA had originally considered ruling that all data should be valid for up to three years, which would have effectively made hourly, daily or weekly data bundle offerings from many operators obsolete. In the newest version of the regulation this was changed to users being given an option to roll-over unused data before the expiry date.
"It maybe reduces the noise factors around data because it will lead to a much better experience [for customers]; in terms of notifications, opting in to use out-of-bundle, roll-over data transfer and having those facilities available," Joosub added.
Revenue implications
He said the regulation will likely have the effect of reducing out-of-bundle revenue for Vodacom "quite significantly" going forward, but the group hopes to offset that with more usage.
The group already saw a reduction in the amount of revenue coming from OOB data due to price reductions last year. In October 2017, Vodacom reduced the out-of-bundle rate on pre-paid and top-up packages, by as much as 50%, to R0.99/MB. Also in October, it reduced the out-of-bundle rate for post-paid customers from R1/MB to R0.89/MB.
Vodacom's results, for the year ended 31 March, reveal that data revenue for the year grew by almost 13% to R23.4 billion, contributing 42.8% of service revenue.
"In the second half, 12% of data revenue was out-of-bundle revenue, down from 22% in the first half last year," the group said in the results announcement yesterday.
According to Vodacom's half year results to 30 September 2017, data revenue for the first half was R11.4 billion, of which 22% is R2.5 billion in out-of-bundle revenue. In the second half, data revenue was R12 billion, 12% of which is R1.44 billion made from OOB. That means that in total, Vodacom made R3.94 billion from OOB data in the year ended 31 March 2018.
Now that users will not be automatically switched to OOB data rates, Joosub admitted there will inevitably be a financial impact on the group.
"We will manage this change through increased elasticity, driven by our content platforms, digital social media partnerships and increased penetration of data-capable devices," the group said as part of its results announcement for the year ended 31 March.
Roll-over data
Another key aspect of the new regulation is that operators need to allow customers the option to roll-over unused data before expiry and also provide customers with an option to transfer data to another customer on the same network.
Joosub said the telco is still working through the implementation of this and the implications on its systems, but said the network will be ready when the regulation kicks in next month.
The regulations also stipulate that bundle depletion notices need to be sent to customers at 50%, 80% and 100% depletion of data.
He says the depletion notifications are similar to what Vodacom already sends to customers, but they will now be more percentage-based.
"We already do the notifications, very frequently, so that is the easier part for us because we are already doing it. The other parts are more difficult, of course," he concluded.
Share