Vodacom joins prepaid price war

Johannesburg, 10 Dec 2001

Vodacom has responded to Cell C`s prepaid launch held less than a month ago by significantly dropping its prepaid tariffs and introducing tariff swapping similar to that offered by Cell C.

The new Vodago SmartStep product will see users pay R2.70 for the first minute of every call and R1.55 for every minute after that, regardless of whether calls are in peak or off-peak times.

The result is that longer calls during peak periods will be cheaper than that offered by Cell C while short or off-peak calls will be more expensive.

Also launched over the weekend was Vodacom FreeChange, a service which allows prepaid users to switch between tariff plans every 30 days, a concept first introduced by Cell C.

Vodacom is also stressing that its 4U package offers rates of 1.5c per second on off-peak calls, giving it a 90c off-peak per-minute charge.

This leaves the newcomer with one trump card: its 10% discount on all calls to two numbers specified by the subscriber.

The move has left MTN out in the cold as far as the prepaid market is concerned, with unattractive tariffs and the highest SMS rates in the market. The company`s only response to Cell C`s introduction to date has been a "lifetime access" offer on prepaid products. However, it has promised a considered response in the near future.

Vodacom is not describing the new option as a competitive response and would not comment on when changes to its contract options could be expected.

"We are constantly reviewing our packages and tariffs, and if and when appropriate we will introduce modifications," says Joan Joffe, Vodacom corporate affairs group executive.

Cell C contracts are available from today with innovations such as discounts on international calls and frequently called numbers and standard rates mostly equal to or better than those offered by the incumbents.

Cell C`s chief strategist Paul Doany has warned that MTN and Vodacom would fall into a trap should they attempt to compete on the basis of price. Cell C will be counting on simplified offerings, but says it would be unable to win market share had it not offered compelling pricing.