Policy Brief 2: South Africa, 2014
Voice and SMS revenues have been eroded by the increasing use of IP-based services such as instant messaging and voice over IP (VoIP). African operators have reacted to this change in the telecommunications market by providing bundling voice, SMS and data services. In South Africa, only MTN and Cell C have introduced prepaid bundled services. Such bundles however are not cheap. With the new mobile termination rate glide path only effective from the end of March 2014, and the implementation delayed by a legal challenge from operators, the effects of the enforcement of the new termination rates are not evident in the market yet. Even so, with increasingly small margins from voice mobile operators have already turned their focus towards data where pricing appears more competitive and is based on bundles.
Highlights:
1. New price strategies based on bundles. Across an increasing number of African markets, mobile operators are offering bundles of voice, SMS and data services. These tariffs seek to retain voice customers while trying to move users towards data and increase data use.
2. MTN and Cell C introduced expensive bundles. In South Africa, only MTN and Cell C have introduced blended prepaid bundles. Discounts and bundles often require upfront payments or volume purchases that are beyond the means of many South Africans.
3. There is little evidence showing a voice price reduction after enforcement of new revised MTR. After the enforcement of the amended MTR regulation, only MTN reduced its prepaid voice tariffs to R0.79, which is higher than the cheapest tariff in the country offered by Telkom mobile at R0.29 on-net and R0.75 off-net.
4. Voice and SMS revenue contraction rebalanced by sharp increase in data revenue. Although voice and SMS revenues are still the primary revenue streams for mobile operators, they decreased in 2013 in opposition to data and equipment revenues that are making up an increasing share of revenue.
5. New financial indicators required to assess cost to communicate. With individualised discounts, dynamic pricing and bundling ICASA would need to collect quarterly indicators of segmented Average RevenuePer User (ARPU) and a monthly average minutes and data of use in order to assess changes in the cost of communication.
