Nyimpini Mabunda . Picture: FREDDY MAVUNDA
Nyimpini Mabunda . Picture: FREDDY MAVUNDA

Vodacom’s reputation as the most expensive mobile operator has done little to narrow the gap between it and its rivals. If anything, that gap is getting wider.

The company activated 3m new voice and data Sim cards between April 2016 and March 2017, taking the total number of subscribers to 37.1m. In comparison, MTN has 30.2m, Telkom 4m and Cell C 15.3m.

Users frequently require more than one Sim card to operate multiple devices.

Vodacom’s growth is thanks to its superior network quality in many parts of the country, coupled with dynamic and innovative data and voice bundles introduced in recent years. Vodacom’s Just 4 You and power bundles promotional products have been such a hit with its subscribers that the company seems to have made these permanent features. It plans to add more offerings in coming months.

Both products offer time-based data and voice packages at reduced rates. Just 4 You packages are designed according to customers’ usage patterns. For example, a user can buy a 1GB bundle for R79 that must be used within seven days or a bundle of 20 voice minutes for R10.

Vodacom has also introduced products targeting different segments of its user base: NXT LVL is aimed at young people, and Siyakha is for the lower end of the market. Siyakha offers free access to selected websites, such as job sites.

Customers have lapped up the products, with about 16.4m customers buying these bundles. The company sold 1.5bn bundles in the year to March, up 34%. Of that, 1bn were voice bundles. It says this helped it reduce its effective price per minute by 14.3%. Data bundle sales grew 44.8% to 495m, resulting in an effective price per MB reduction of 16%.

Chief officer for consumer business Nyimpini Mabunda says Vodacom analyses data and voice consumption, and uses this information to design packages suitable for the needs of its customers.

"We may have 37m customers, but they are all different. We try to categorise them and provide them with relevant propositions," he says.

In future, consumers may be able to buy bundles specifically for their favourite social media sites.

MTN refused to say how many bundles it has sold or what the take-up of its promotional offers has been. A spokesman said only that the use of its promotional offers has increased.

Research ICT Africa says innovative pricing and bundling strategies improve the effective price of data, but their cost structures are complex and this affects the consumption of "non e-illiterate users". The research company says this should be a concern for the industry regulator, the Independent Communications Authority of SA, as well as for policy makers.

And its assessment of rates in Africa shows that the cheapest 1GB price in SA ranked the country 27 out of 49 African countries in the first quarter of 2017.

Vodacom says its prices have declined by 44% in the past three years. And Mabunda says prices will continue to drop: "Prices will come down at a much faster rate this year than before. Our commitment is to make access to our services even more affordable."

A recent study by Research ICT Africa says data subscriptions are increasing, but the average time spent online by South Africans is still low by global standards. Internet use is more limited than in other lower-middle income countries.

This means SA may be reaching the critical mass necessary for the link between broadband penetration and economic growth — but the intensity of use may be too low on average for it to enjoy the associated effects.

Telecommunications & postal services minister Siyabonga Cwele said recently that prices are still high and "the speed of intervention is critical in a rapidly evolving sector such as [information and communications technology]". Government leaders say SA’s high data costs should be investigated by the competition commission.

Frost & Sullivan digital transformation industry analyst Lehlohonolo Mokenela says data revenue growth has helped counter the decline of traditional voice and messaging, but Vodacom "seems intent on building its value proposition and not just relying on connectivity".

"With the price of data expected to continue to drop, over the long term, data will not be a growth driver for operators," he says.

Please login or register to comment.