Cheaper smartphones key to spinning data services into money

MTN’s SA business is working on a plan to offer cheap smartphones for as little as R99 to more than 1.2-million of its prepaid customers as part of an effort to get more people to consume its data services, the company’s main money spinner. 

SA’s second-largest mobile operator announced the new offering on Monday, saying it is meant “to extend digital inclusion and ensure that South Africans are not left behind in the country’s transition to 4G and 5G technologies”.

Operators are battling to increase usage of their networks because smartphones are out of reach for many South Africans. 

Making devices more accessible is good for consumers, and it can increase the number of customers that mobile providers can have as well as the volume of data services that flow through their networks, ultimately adding to their profit.

And as operators build their portfolios of digital messaging, streaming, financial and gaming services, having more devices with consumers gives these platforms more room to grow. 

GSMA, an industry body, says mobile operators in Africa have in recent years invested more than $40bn (R731bn) in capital expenditure — mostly on deploying and expanding 4G networks.

In SA, this has translated in Vodacom and MTN each spending about R10bn on such network expansion annually in recent years. However, adoption of the technology offered by the networks continues to be hampered by low device penetration, mainly due to cost.

MTN group CEO Ralph Mupita recently acknowledged this issue, telling Business Day: “What we face today is not a coverage gap … but the big thing is a usage gap and that is [because of] cost of the device.” 

He said MTN has been working on a number of plans, including talks with manufacturers about getting smartphones at $20 or less, that are capable of internet access.

Rival Vodacom recently launched a service allowing customers to pay small daily amounts towards the cost of a device. 

MTN’s new SA initiative will be done in three phases, starting May 2025 until the end of 2026. In phase one, 5,000 carefully selected customers will be offered 4G smartphones. Selection will be based on usage profiles, spending patterns and tenure, and will mainly be in Gauteng.

In phase two, more than 130,000 customers nationally will be offered the devices. In the third phase, more than 1.1-million MTN customers across the country will benefit, the company said. 

The devices will come preloaded with a variety of major applications on condition that the device is only used with an MTN SIM card.

To make this happen, MTN has partnered with Smartphone For All, founded by former CEO of Metrofile Nigeria, Babatunde Osho. 

“As the country transitions to technologies like 4G and 5G, it is vital that we take proactive steps to connect as many South Africans as possible,” said MTN SA CEO Charles Molapisi.

“Through this initiative, we are not only providing our customers with the tools they need to access digital services, but we are also playing an active role in helping to bridge the digital divide. Regardless of where they live, we want to ensure that all South Africans can access the digital world.”

MTN has been actively working to push up similar access in Uganda and Rwanda in recent years. 

gavazam@businesslive.co.za