Vodacom and MTN have fooled us: analyst

Analyst says that Vodacom and MTN are psychologically manipulating consumers and ICASA to believe their prices are low

Rudolph Muller

July 23, 2012

Hlelo Giyose, chief investment officer and principal at First Avenue Investment Management, said that Vodacom and MTN have “psychologically manipulating” consumers and the regulator (ICASA) to believe that South Africa has affordable mobile services.

Speaking on Summit TV, Giyose said that he will not invest in any South African telecommunications companies since they are unlikely to continue their strong financial performance.

“The level of competition is intensifying in South Africa. The market does not believe these mobile companies will be as successful in the future as they have been in the past. The landscape has changed,” said Giyose.

“These companies have done a really great job of psychologically manipulating our consumers here at offering mahala (a free package) when there is actually a cost here,” argued Giyose.

“They have done a great job of psychologically convincing the regulator that the prices here are cheaper than anywhere else in the world, yet South Africa has the third highest cost for mobile calls globally.”

Giyose said that if an investor buys shares in Vodacom and MTN, they are betting that society stays dumb for a long time and that people do not see that these mobile companies are lying. “That is not a bet I want to make,” Giyose concluded.