The Prepaid Resellers Association (PRA) says it is meeting with the Independent Communications Authority of SA (ICASA) this afternoon to discuss the cellular networks` revision of their prepaid tariff structure.
Hein Viljoen, chairman of PRA, says ICASA is investigating the new tariff structures, which come into effect on 1 April. He says the new tariffs could result in a 50% decrease in the resellers` bottom line.
Viljoen says while the price of airtime for the consumer will remain the same, the PRA`s main concern is that while the networks are increasing their profits, they are not putting anything back in the consumers` hands.
"Added to that, the decrease in the resellers` bottom line could mean it is not cost-effective for resellers to distribute airtime to rural areas," he says.
The PRA is meeting separately with MTN and ICASA this afternoon and Viljoen says they want to meet with Vodacom and Cell C as well to discuss the reason for the increases and find out what their new pricing structures will be.
Resellers from around the country grouped together to form the PRA, after they heard the networks would be readjusting the discount given to them on the sale of airtime. The PRA aims to voice concerns arising between networks and retailers.
Viljoen says the resellers purchase their airtime from wholesalers and sell it to retailers. "And with the wholesalers still taking their cut, the resellers and retailers are really going to feel the pinch from the new tariff structure."
Slimmer margins 'inevitable`
Mthobi Tyamzashe, Vodacom group executive of corporate affairs, says Vodacom had been putting off the tariff increase for as long as possible.
"Vodacom would have preferred to retain the original discount structure and therefore put the adjustments off for as long as possible. However, it has been obvious to all players that the South African cellular market is maturing and slimmer margins are inevitable."
Tyamzashe says the vast majority of Vodacom`s resellers do not have prepaid airtime as part of their core business, and it was therefore doubtful that any reseller of airtime would have to cease operations due to adjustments to the tariff structure.
"As a result of these adjustments, resellers may be affected by increases in some areas and decreases in others. However, there will be no detrimental effect on the consumers."
However, Viljoen says Tyamzashe is not taking into account the hawkers and small enterprises that run vending businesses.
"Many prepaid users in rural areas purchase their airtime through vending machines. With the new price structure it may no longer be viable for resellers to run machines in those areas," he says.
No consultation
Moira Sheridan, Cell C PR and media relations manager, confirmed the company would be adjusting the commissions that wholesalers receive on the sale of airtime.
She says Cell C`s modifications to its commission structure are in no way connected to the other networks and any adjustments they may be making.
"Changes are made to the commission that wholesalers will receive on an ongoing basis and there was no consultation with either of the other networks as to the modification of relationships with wholesalers. It is pure coincidence that we are adjusting our structure on the same day as they are," she says.
Because the commission structure varies from case to case, Sheridan says she cannot comment on the knock-on effect down the channel as the wholesalers have various channels of selling the airtime.
Buckley McGrath, MTN Service Provider COO, says while there have been reductions in some discounts, an analysis of global cellular discounting trends has shown that local distributors have enjoyed the best margins prevalent among South African operators.
"The current reduction is the next step in a plan that started a few years ago and is a move towards normalising the discounts to the trade. Currently the majority of MTN`s channels are no worse, or better off than before.
"The new model has created an opportunity for distributors to increase their overall earnings if they align their sales activity to certain MTN products. MTN commenced a revision of its margin structures during 2003 and this decision is the result of a systematic assessment of MTN`s commission structures," he says.
Prepaid resellers who want more information on the PRA can contact Viljoen via e-mail at hein.viljoen@gomail.co.za.
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