JOHANNESBURG - MTN South Africa will slash data prices by up to 50percent and offer 20MB of free daily data to each customer from next month in response to the call by the Competition Commission for the group to reduce data prices.
Chief executive Godfrey Motsa said on Friday that the decision to cut data prices was voluntary and would be beneficial in the long-term despite the short-term impact on its financials.
“While there will be pressure on MTN SA’s short-term financial performance from these initiatives, MTN believes that the reduction in pricing will be compensated over time by elasticity and customer growth, and growth in prepaid data service revenue will return in a couple of quarters,” Motsa said.
The group plans to offer each customer 20MB of free data daily - or 600MB a customer every month - through its instant messaging platform, Ayoba, which has 500000 customers in South Africa.
The cost of the monthly 1GB bundle will fall 33percent to R99 from R149, the company said, adding that customers had already benefited from a 76percent reduction in prices between February 2017 and February 2020.
Motsa said the group planned to launch the OpenTime service, which would enable free access to public benefit services through a link on this website.
“MTN SA will offer a monthly 500MB free data access to public benefit services websites every month, amounting to 6GB per year, for each of MTN SA’s 29million customers,” said Motsa.
MTN said it would extend the websites that formed part of the public benefit service to include health, public universities, vocational colleges, educational resources and employment sites as part of its zero-rated data access programme.
Motsa said the allocation of radio spectrum would ensure that the telecoms industry would ensure cost-effective prices for customers.
“The release of new spectrum in South Africa is urgently needed and will greatly assist our ability to service increased customer demand in a more cost-effective manner,” said Motsa.
MTN SA’s rival, Vodacom, two weeks ago also unveiled a set of initiatives to cut data prices and relieve cash-strapped consumers following an agreement with the Competition Commission.
The commission’s data market inquiry released in December found that South Africa’s data prices were excessive and called for MTN, Vodacom and Telkom to cut its prices in a bid to level the playing fields.
The commission recommended that MTN and Vodacom substantially reduce tariff levels, especially prepaid monthly bundles, within two months of the release of the report.
It also said that evidence suggested that there was scope for MTN and Vodacom to reduce prices in the region of between 30 and 50percent.
Telkom was also expected to announce a reduction in data prices in line with the commission’s recommendations.
Andre Schoeman, the executive responsible for enterprise business at JSE-listed technology company Jasco, said on Friday that the reduction in data cost would save thousands of call centre jobs.
Schoeman said in many developing countries, particularly in South Africa, call centres provided much-needed entry-level opportunities absorbing thousands of relatively under-skilled job-seekers.
He said the coronavirus had created a dilemma for call centre employees because they worked relatively close to one another. “Without affordable data, call-centre operators would in all likelihood consider retrenchments,” said Schoeman.
MTN shares closed 9.26percent lower at R35.66 on the JSE on Friday.