Chris Spillane
VODACOM, South Africa’s largest wireless operator by subscribers, will raise the price of most subscription contracts from May as it seeks to revive sales hit by regulatory cuts and rising power costs.
The unit of Newbury, England-based Vodafone Group, will raise the cost of five contract-price plans, including an increase of as much as 10 percent on one of its mobile-broadband packages, Vodacom said yesterday.
Sales declined 3.1 percent to R16 billion in the three months to December.
A forced reduction in fees for use of its network has “had a major impact” on sales, while costs have increased due to electricity supply issues, spokesman Richard Boorman said. “We have had to review our tariff structures in tandem with implementing cost reduction programmes within the company.”
Vinnie Santu, a Cell C spokesperson, was not able to respond to direct questions put to her about how Cell C would react to Vodacom’s move to hike the cost of five contract-price plans.
However, Santu did issue a standard response that Cell C issues when questioned about its tariffs.
Larry Annetts, MTN South Africa chief marketing officer, said: “MTN does not comment on competitor activity, suffice to say that the decision is understandable during these challenging economic times.
“MTN shall continue to remain competitive and committed to its strategy of developing attractive and tailored products and solutions that will enhance customer experience and lead to the delivery of a bold, new digital world.”
Vodacom has been investing in spare fuel as South Africa struggles with power shortages.
The communications regulator also halved the fees Vodacom can charge competitors for using its network, a move designed to help smaller operators in a market led by the company and MTN.
Vodacom shares fell as much as 7 percent and traded 2.09 percent lower at R131 in Johannesburg, paring the year’s gain to 1.7 percent.
“Our expectation is that the average effective price per unit of both voice and data will continue to come down, making services more accessible,” Boorman said.
“As individual customers consume more voice and data their overall spend will either be flat or increase.”
The wireless carrier was trying to reduce costs and was exploring the possibility of sharing infrastructure on the continent with competitors Millicom International Cellular and Bharti Airtel, a person familiar with the matter said earlier this month. – Bloomberg. Additional reporting by Nompumelelo Magwaza