While 2013 saw minority cellular operators lowering prices in a bid to win consumers, SA's dominant players mostly remained stuck in the mud.
This is according to Research ICT Africa's (RIA's) latest data report on the state of SA's prepaid mobile rates in comparison to other African countries.
According to RIA, while last mobile entrant Telkom Mobile signifcantly reduced both on-net and off-net prices in the third quarter of 2013 - making available the cheapest tariff in the prepaid mobile voice market - this failed to bring down the prices of dominant operators MTN and Vodacom.
The data comes in the wake of the Independent Communications Authority of SA's (ICASA's) 2010 mobile termination rate (MTR) glide path, which came to an end in March last year, when MTRs - the fees operators pay each other to carry calls on their networks - reached an all-time low of 40c.
ICASA's latest proposed MTRs and associated asymmetry, which deviates from its October draft regulations, will see termination rates dropping to 20c payable by Cell C and Telkom Mobile, but going up to 44c for Vodacom and MTN.
Pricing plateau
RIA, which monitors prepaid mobile prices across Africa every quarter, says Vodacom and MTN still managed to thrive financially following the introduction of a 40c MTR, while Cell C and Telkom Mobile took the lower wholesale rate and turned it into consumer benefit by lowering their prices.
"Although the rate at which the larger operators are able to attract new subscribers has slowed down, they remain positive. MTN managed to add 233 000 new subscribers in the third quarter of 2013, after experiencing a loss in the previous quarter when it was the only operator not to lower its prices immediately after the MTR reduction."
RIA acknowledges that Vodacom responded to competitive pricing after March last year, but says prepaid promotions came to a standstill in the last quarter. MTN points out that it responded in March with a new prepaid tariff it positioned as "all-day, all-network true per-second flat rate billing", called One4All. The tariff introduced a rate of R1.20 per minute - or 2c per second - for its pay-as-you-go customers.
The report says: "The final [MTR] reduction appears to have enabled late entrants to drop their prices sufficiently to, this time, force a response from Vodacom. Vodacom brought its prices down to match Cell C's 99c [tariff] - but, having not lodged the tariff correctly with ICASA and having staved off a churn from their network to Cell C - the price settled at R1.20.
"MTN, on the other hand, sought to resist a price war by preserving their high prices and relying on their dynamically priced MTN Zone to retain and attract price-sensitive customers."
RIA concludes that MTR reductions impacted positively on prepaid mobile retail prices in the second quarter of last year - but by the last quarter of 2013, prepaid voice mobile prices had plateaued, with no further reductions in prices of Vodacom and MTN.
"The absence of further responsiveness to pricing pressure from smaller operators, who reduced their prices dramatically during 2013, means SA's dominant operator prices remain expensive compared to other African countries."
As a result, SA's ranking based on the dominant operator in the country (a reflection of what most consumers are paying) has only slightly improved compared to the third quarter of 2013, says RIA. SA stands in 19th place for highest price in Africa in this regard (according to the RIA Africa prepaid mobile pricing transparency index).
RIA suggests this stagnant scenario prompted ICASA to cross over into the next frontier by slashing MTRs by half.
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