In this edition of the Business Day Spotlight we’re taking a look at what Vodacom’s decision to reduce data prices means for the local mobile industry and consumers.

Our host Mudiwa Gavaza is joined by Ofentse Dazela, director of pricing research at information communication technology research firm Africa Analysis to discuss the price cuts.

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Earlier this week, SA’s largest mobile operator, Vodacom, was the first major network to say it will cut its prices for mobile internet connectivity after the Competition Commission said in December that operators should slash costs to consumers by up to 50% by March or face prosecution.

Dazela says the announcement is a good thing for the pre-paid mobile data market as it has not seen any meaningful price revisions since 2011. With more than 90% of South Africans using pre-paid data bundles, this will ease the burden for consumers already under pressure from a slowing economy. That said, pricing for contract customers has tended to be better, though input costs remain the same, Dazela notes.

The commission has argued that it is unfair that Vodacom and MTN charge more in SA for data than they do in other countries in which they operate.

As to whether data prices are too high in SA, Dazela cautions that it is difficult to compare one country to the next. Different market conditions, level of network investment and the quality of service differs from one geography to another, which influences pricing, he says. 

However, Dazela says there are “good times ahead for consumers”. Vodacom’s cuts will likely mean MTN will also reduce its own prices, and that these cuts will likely force smaller players, such as Telkom and Cell C, to revise their own prices, which means better pricing across the board for local consumers.

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