A price war is on as two cellphone providers have announced large cuts to their prepaid rates – offering a lower charge than contract prices for the first time in 18 years.
On Wednesday, Cell C said it would cut its prepaid rate to 99c a minute, applicable at all times of the day and to any network. Soon after, Vodacom said it, too, would offer the 99c charge to prepaid clients.
MTN, which says it won’t join the fray by offering the 99c option, claims its prepaid packages already have numerous perks that are competitive with this new pricing.
Cell C and Vodacom say the idea is to simplify the process for customers, who no longer need to worry about different pricing for on- and off-peak calls and to other networks. This has led to an outcry by contract holders, who feel they are not benefiting despite their loyalty.
Serame Taukobong, MTN’s chief marketing officer, said numerous services that gave users free calls were unrivalled by any other network.
“The MTN Zone price plan, which benefits 70 percent of customers on the base, consistently offers customers free calls through our unique offerings of Mahala Thursdays, Mahala Nights, Mahala Weekends and Mahala Day Time rates.
“These offerings create real value by allowing customers to call at a zero rate for as long as the customer’s call lasts longer that one minute,” said Taukobong. “Through the MTN Zone Mahala offering, the most attractive rates are applicable at various times of the day, which allows customers flexibility for when they would like to call.
“Consequently, the new pricing announced by competitors would in fact be uncompetitive based on our customers’ current usage.”
The network believes that its customers prefer flexibility in the amount of time spent on a call, and that a price drop would not be in their customers’ best interests.
Vodacom admitted that the 99c rate was cheaper than contract bundles, but Richard Boorman of corporate affairs said not all its special deals were introduced at the same time.
“We offer specials for both these customers at different times,” he said.
Vodacom’s marketing head, Enzo Scarcella, said: “Customers have been looking for simplicity and for value, and Freedom 99 delivers exactly that. Now it is really that simple.”
In addition, Freedom 99 customers who recharge with R12 or more can talk for free every night with Nightshift, which offers 60 minutes every day for seven days to call Vodacom customers between midnight and 5am.
Cell C announced the cut through its new chief executive Alan Knott-Craig – an announcement quickly followed by Vodacom as it stepped in to match the 99c price.
Cell C said it would slash prepaid call rates by more than 34 percent with a new prepaid voice product and tariff plan called 99 Cents For Real.
This slashed off-net and peak call tariffs to 99c per minute, with per-second billing from the first second, Cell C added.
Knott-Craig said this was the most competitive, fair and transparent rate in the market today.
“It is an unprecedented rate cut, which pre-empts lower mobile termination rates (MTRs) next year and will drive competition in the market to the benefit of consumers. Peak MTRs are currently R0.56 per minute. To Icasa I say drop MTRs even further, provide Cell C with asymmetrical MTRs to help us achieve the scalability we need to compete even more fiercely with the large incumbents, and we will surprise you and them with our response.
“Help us to help the consumer. With a vigilant Competition Board, the playing fields will be levelled, and competition will flourish in the telecoms sector with Cell C setting the pace,” he said.
Cell C is also cutting the rate of MMS messaging to 99c a message and giving customers data at 99c per megabyte. SMS charges will remain unchanged at 50c per message to any network.
Virgin Mobile communications officer Vanda Harries said while the company offered some of the most competitive prepaid packages, it would consider a change in costs in response to its rivals’ drops.
8ta and Telkom spokesman Pynee Chetty said there appeared to be no plan to drop prepaid prices, but was unable to comment further at the time of publication. - The Star