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Afrihost’s Air Mobile may induce customer churn, say analysts

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 13 Jun 2019

Afrihost’s new prepaid mobile data offering, Air Mobile, has the potential to cause customer churn in the South African market.

This is according to analysts, after the Internet service provider yesterday announced its R69 per gigabyte offering.

“Afrihost has struck a blow against high data prices with prepaid mobile data at just R69 per GB – the lowest prepaid data rate without a contract, quick expiry or promotion,” the company said in a statement.

Air Mobile data, which uses the MTN network, will be valid for 60 days. Air Mobile users will receive 1GB mobile data free, whether they purchase any data or not, the company says.

It explains that users need to download the Afrihost app, complete the sign-up process and claim their free GB. They will be able to claim 1GB free for an additional two months. Thereafter, they will need to make a minimum purchase of R69 in order to qualify for additional free data.

Subscribers will be able to transfer data to friends and family who are also on Air Mobile from the Afrihost app.

Brian Neilson, director at local market research firm BMIT, comments that Air Mobile’s data prices appear very attractive next to most other standard prepaid offerings (excluding special promotions).

“One might find something slightly better in specific bundle sizes; for example, Cell C’s 1.5GB for R80, compared to Air Mobile’s 1GB for R69.

“However, Air Mobile’s bundle is valid for two months against only 30 days for this Cell C offering, which might level the playing field here too,” he says.

Neilson adds that while the obvious answer might be that the biggest competitors in the market in general are Vodacom and MTN, from another perspective, one could pick Cell C and Telkom Mobile as the disruptive challengers in the market.

“Air Mobile’s free 1GB per month promotion for the first three months is likely to induce a considerable amount of churn among those prepaid customers who are generally churning a lot, provided they are aware of Air Mobile and are willing to jump through a few hoops to take advantage of it.”

He believes there is a good chance Air Mobile can then retain these customers, despite ongoing churn among multiple SIM cards in the hands of each unique customer.

“The attractive price point equating to R69 for 2GB a month from month four should be sufficient, but if not, Air Mobile can try to retain them through ongoing promotional offerings as a means of neutralising competitive promotions. After activating your SIM, they have your number and can contact you directly.”

For World Wide Worx MD Arthur Goldstuck, Air Mobile “wipes the floor” with other conventional operators in terms of cost of data bundles that do not expire in 30 days.

“Cell C beats them on price, but not on flexibility. However, when looking at data only, Rain Mobile is by far the lowest-priced, at 5c per MB whether in or out of bundle. On the other hand, if one adds Air Mobile’s free 1GB per month, it becomes by far the lowest priced of all,” says Goldstuck.

He believes Air Mobile can disrupt the market if it sorts out availability issues. “I’ve been using Afrihost for a long time, and regularly find I don’t have good data access in places where I still get a good MTN signal.”

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