A data pricing war is in full swing in a fiercely competitive and saturated mobile market, with SA’s operators in an all-out battle for market share.
Cell C CEO Douglas Craigie Stevenson, who has more than two decades’ experience in the industry, said competition among local operators, especially over the past two years, has been at a high.
In such a mature market, telecommunication companies are largely competing on price, as consumers move between networks looking for the best value, he said.
SA’s fastest-growing mobile operator, Telkom, said competition in the data market has become aggressive over the past year and it is “conscious of the fact that to remain competitive we need to consider what our competitors are doing in the industry”.
The operator continues to push the boundaries of how low data prices can go in the local market, revising its data pricing earlier this week.
With the average price of 1GB of data still at about R150, Telkom has this down to just R40 on its SIM-only mobile data plans. Customers can also get 6GB for R129.
“The target market for the new mobile data plans is the mobile individual, students and people who require a secondary data connection while they are away from the office, home or not always within a Telkom mobile coverage area,” the company said.
Despite consumers still feeling the pinch of local data costs, mobile operators say data prices have been on the decline.
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“MTN’s annual financial statements show that effective rates per MB [megabyte] fell by 87% between 2011 and 2017. The effective rate per MB is calculated by dividing the total data revenues by total data traffic,” Jacqui O’Sullivan, executive for corporate affairs at MTN SA, said.
Ofentse Dazela, director of pricing research at technology research firm Africa Analysis, said that in the prepaid market Telkom continues to offer the most affordable data plans in the market on a price per megabyte basis, followed closely by Cell C.
He said the popular Free Me packages and the SmartInternet fixed-LTE packages have played a critical role in Telkom’s overall subscriber growth. The operator grew its subscriber base 85% in the last financial year to 9.7-million.
In the contract market however, Dazela notes that prices have largely remained static but said a price war has been taking place between the operators on promotions and special data offers.
MTN is leading the charge in the contract market, he said. Customers who used to get 5GB data for about R199 a month, now get 40GB data for the same amount. Dazela added that Vodacom also seems to be stepping up its efforts to offer similar pricing to MTN to defend its market share.
Vodacom said it has reduced its out-of-bundle prices up to 70%, contributing to the 37% decline in average data prices in the past year and a 57% reduction in average data prices over the past three years, despite not having access to further available spectrum, a spokesperson said.
Vodacom said that there has been a shift by prepaid customers to hourly, daily, weekly and fortnightly data bundles.
Mobile operators offer cheaper data rates for fixed wireless internet than mobile internet. Cell C said the reason for this is that fixed options usually work on a subscription basis, which differs from mobile internet. Fixed options also have to compete with cheaper alternatives such as fibre, where available.
“The inference by operators is that data users at home consume a lot of data; connecting to servers working from home, streaming videos, music and other content services, while hand-held devices are mostly for quick browsing and for checking social media sites over a short period of time,” Dazela said.
“So for mobile network operators, it makes sense to include small data capacity for hand-held devices, because once users reach their homes, they can simply connect their mobile devices to Wi-Fi routers and update apps, or download new applications they need,” he said.
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