Don't blame Vodacom and MTN for Government's failures

LaraC

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“Vodacom and MTN must independently reach agreement with the Commission within two months on a reduction in the headline prices of all sub-500MB 30-day prepaid data bundles to reflect the same cost per MB as the 500MB 30-day bundle, or cost-based differences where such cost differences have been quantified, as well as the cessation of partitioning strategies that contribute to anti-poor pricing and/or inferior service outcomes.”
Can I assume that the majority of Vodacom and MTN's customers are on prepaid and that they buy less than 500MB data? :rolleyes:
 

Emjay

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Maybe we should organise some free helicopter rides....
Reading these threads always surprises me at the level of ignorance regarding how these companies operate, the complexity of these networks, and how a free market sets prices.

Doesn't seem like they are providing a lot of value with profits like that.
A company so profitable does not provide value?

Am I reading that correctly?

The economy works really well when you don't extort payment for almost valueless data!!
Can you explain how data is valueless?
 

SaiyanZ

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A company so profitable does not provide value?

Am I reading that correctly?
Yeah, I thought it's pretty simple to understand. 38.9% of your monthly premium goes straight into profits. Say another 10% for marketing which does nothing for the service they provide to you. So about half or more of what you pay to Vodacom is not for the data/service you are getting from them.
 

Emjay

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Yeah, I thought it's pretty simple to understand. 38.9% of your monthly premium goes straight into profits. Say another 10% for marketing which does nothing for the service they provide to you. So about half or more of what you pay to Vodacom is not for the data/service you are getting from them.
If there is zero value, why are people handing their money to them? What profit they make is irrelevant.
 

SaiyanZ

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If there is zero value, why are people handing their money to them? What profit they make is irrelevant.
Because there is not enough competition. To put it in perspective, profit margins in the more competitive SA insurance market is around 10% on average. Not close to 40%.
 

wingnut771

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Because there is not enough competition. To put it in perspective, profit margins in the more competitive SA insurance market is around 10% on average. Not close to 40%.
if telkom/cell c/rain had networks like vc/mtn, then you'll see prices fall, but as things stand now, they can charge what they like because they know their networks are better (coverage and speed).
 
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Emjay

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Because there is not enough competition. To put it in perspective, profit margins in the more competitive SA insurance market is around 10% on average. Not close to 40%.
You now want to conflate insurance and telecommunications? Maybe you should stick to insurance. You cannot compare the two, as they are completely different landscapes in terms of capital expenditure, risk, etc.

If there was no value in these services, people would not pay for it. It really is a simple equation.
 

SaiyanZ

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You now want to conflate insurance and telecommunications? Maybe you should stick to insurance. You cannot compare the two, as they are completely different landscapes in terms of capital expenditure, risk, etc.

If there was no value in these services, people would not pay for it. It really is a simple equation.
You don't understand value or what I said. Let's just leave it at that.
 

Emjay

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You don't understand value or what I said. Let's just leave it at that.
I understand value very clearly. You seem to think that profit margins is what drive prices. Maybe you should return to your eco101 books.
 

Shi

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Yeah, I thought it's pretty simple to understand. 38.9% of your monthly premium goes straight into profits. Say another 10% for marketing which does nothing for the service they provide to you. So about half or more of what you pay to Vodacom is not for the data/service you are getting from them.
38.9% refers to gross profit margin, not net profit !!
 

rietrot

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Yeah, I thought it's pretty simple to understand. 38.9% of your monthly premium goes straight into profits. Say another 10% for marketing which does nothing for the service they provide to you. So about half or more of what you pay to Vodacom is not for the data/service you are getting from them.
It's a businesses. Many businesses have markups of 100% or more. If you don't like it go somewhere else, if you can do it better then do it yourself.
 

rietrot

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Vodacom and Mtn isn't making enough profit. Vodacom is currently trading at a PE of 12 which is high for a utility company.
Anyone who thinks they're killing it could go and buy some shares. It's a public company open to anyone.

Mtn's share price is just stupid at the moment, PE 27, but that might be all the fines they paid Nigeria last year?
 

krycor

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Yup, Spectrum is needed urgently, perhaps they can give out 500meg pp/pm (throttled) and the govt pay them for this in spectrum?
So this is a bit of misdirect.. they sell larger bundles at cheaper per mb rates than the smaller bundles indicating that it’s only part of the problem..

I reckon the surge in usage will likely offset loss initially.. as I said it’s dumb.. economies of scale work everywhere but in SA nooooo got to price everything highly which makes me wonder if their networks are just shitty and technically can’t handle the throughput when large % of customer base is actively using.

Ie the pricing is restricting number of active user activities.. to reduce cost via contentions. So they don’t mind a fewer data users.. but lots means network might need reworking.
 

Emjay

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Vodacom and Mtn isn't making enough profit. Vodacom is currently trading at a PE of 12 which is high for a utility company.
Anyone who thinks they're killing it could go and buy some shares. It's a public company open to anyone.

Mtn's share price is just stupid at the moment, PE 27, but that might be all the fines they paid Nigeria last year?
Good point.

@SaiyanZ


Santam PE Ratio: 14.04


Momentum PE Ratio: 12.12


Vodacom PE Ratio: 12.23
 
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