Cellular price cuts needed, says experts

[mikef]

Vodacom would have lost out the most on revenue as they have more net inbound calls. MTN would have a slight net loss as they would pay more to Vodacom but get less from Telkom. Cell C may lose out overall.

Not sure of your grounds for making above statements and or source of info for coming to your conclusions

However unless you have inside information indicating different calling patterns between the different operators I suspect you could be drawing the wrong conclusion. The absolute level of net inbound calls does not make a difference as long as the average calling patterns of each operator is the same and the MTR is symmetrical. Vodacom's loss due to the reduction in MTR is likely to the highest followed by MTN and then CellC but primarily due to Telkom's (and possibly the VOIP operator's) gains and not due to pmts between the 3 mobile operators.

 

[entrepr]

Not sure of your grounds for making above statements and or source of info for coming to your conclusions

However unless you have inside information indicating different calling patterns between the different operators I suspect you could be drawing the wrong conclusion. The absolute level of net inbound calls does not make a difference as long as the average calling patterns of each operator is the same and the MTR is symmetrical. Vodacom's loss due to the reduction in MTR is likely to the highest followed by MTN and then CellC but primarily due to Telkom's (and possibly the VOIP operator's) gains and not due to pmts between the 3 mobile operators.

I have seen some of the numbers but it's basic theory of networking - well known in the industry. If network A has 20m customers, B has 12m and C has 4m, then the net inflow is always from the smaller to the large (because A has more people to phone), ie from B to A and from C to A.

Let's say there are A has 10m calls per day coming in and 7m calls going out, then it has 3m net incoming calls each day. If these calls are charged at R1.25, network A will bag R3.75 net revenue. If the calls change to 90c, then network A will then only bag R2.75m. In other words, network A will lost R1m per day on that MTR reduction.

Another issue: since calls are very elastic on price, reducing end-user prices will increase overall calls. Since hardware costs much less than in the past (capacity, space and power) and transmission costs less (increased bandwdith and better compression), operators should be able to maintain their profits if they are clever (as has been shown in Asia).

Final point - prepaid costs have come down, but not postpaid. We are currently tied into two-year contracts and rewarded for our loyalty with higher prices!

 

[Joy-Energiser]

No shlt sherlock.My Grandmother could have told us this.