Vodacom CEO explains why mobile data expires

[Emjay]

Funny how Cell C is 10 times cheaper but competition doesn't seem to have the desired effect. Not when the 2 largest players has had market dominance for 10 years and even after that didn't have to really compete and keep on matching each others prices. What we really need is 8 or so smaller networks competing with each other, and no, that is not too much if you look at other countries but rather a minimum for good competition.

And why do you think that is? If one small service provider is not going to be successful even when they can start price wars, what is going to differentiate a bunch of others?

They would in fact be less successful as any investments are not going to yield any return for many years. Sometimes even a decade. A price war would kill any small service provider in months. It's not so easy to wave a wand and say that 8 (or so) other providers can enter the market and make any sort of profit.

 

[Swa]

And why do you think that is? If one small service provider is not going to be successful even when they can start price wars, what is going to differentiate a bunch of others?

They would in fact be less successful as any investments are not going to yield any return for many years. Sometimes even a decade. A price war would kill any small service provider in months. It's not so easy to wave a wand and say that 8 (or so) other providers can enter the market and make any sort of profit.

We know why it is. Vodacom and MTN has had too long to build up their duopoly user base. In countries that were successful in telecoms they had 8 to 10 operators in an area with all being forced to roam on each other and it actually works perfectly. That is actually the idea with the plan to introduce smaller area operators with the new spectrum allocations. But it's a little too late and we need other measures as well before we can go that route like massively skewed interconnect rates.

 

[Emjay]

We know why it is. Vodacom and MTN has had too long to build up their duopoly user base. In countries that were successful in telecoms they had 8 to 10 operators in an area with all being forced to roam on each other and it actually works perfectly. That is actually the idea with the plan to introduce smaller area operators with the new spectrum allocations. But it's a little too late and we need other measures as well before we can go that route like massively skewed interconnect rates.

So what measures should be put into place? For Government to step in and set pricing?

 

[marine1]

2018 almost 2019 and we are still having this discussion? This and OOB. Vote with your wallets. This is his best response? It's all about insane profits

 

[Swa]

So what measures should be put into place? For Government to step in and set pricing?

I just said what is required. Have multiple small area operators and force roaming between all operators with massively skewed interconnect rates instead of trying to reduce interconnect rates. But the current operators don't want it. They want even more spectrum to be assigned to them while they haven't done much with what they have. Cell C has probably done the most in refarming spectrum but take a look at Jannie's statements, Vodacom doesn't want to prioritise the spectrum for the sake of accommodating a few corporate clients using outdated decade old legacy equipment while other international operators are phasing out 2G and already have a cut-off date.

 

[Emjay]

I just said what is required. Have multiple small area operators and force roaming between all operators with massively skewed interconnect rates instead of trying to reduce interconnect rates. But the current operators don't want it. They want even more spectrum to be assigned to them while they haven't done much with what they have. Cell C has probably done the most in refarming spectrum but take a look at Jannie's statements, Vodacom doesn't want to prioritise the spectrum for the sake of accommodating a few corporate clients using outdated decade old legacy equipment while other international operators are phasing out 2G and already have a cut-off date.

Let's just break this down.

Do you think that Vodacom would rather invest in another business (which business is going to be a major threat) instead of upgrading it's equipment to mitigate the lack of bandwidth? That business alliance will give Rain know how and bolster their revenue. And, you do realize that Vodacom puts billions back into its network? Do you think that this is done with outdated equipment or without a road map?

 

[Johnatan56]

Let's just break this down.

Do you think that Vodacom would rather invest in another business (which business is going to be a major threat) instead of upgrading it's equipment to mitigate the lack of bandwidth? That business alliance will give Rain know how and bolster their revenue. And, you do realize that Vodacom puts billions back into its network? Do you think that this is done with outdated equipment or without a road map?

That profit that was posted? That doesn't include the re-investment into their networks.
And again, you're missing the point, this market doesn't allow for new entrants due to the spectrum issue.

 

[Emjay]

That profit that was posted? That doesn't include the re-investment into their networks.
And again, you're missing the point, this market doesn't allow for new entrants due to the spectrum issue.

Not missing any point. If you guys think that a business will help create it's own competition to try hold onto profits is crazy speak. Or that a service provider will put outdated equipment onto its network. Maybe there is truth to what they are saying, don't you think? This is especially possible in light of ICASA being completely inept, and (IMO) and probably just as corrupt as the Guptas.

Like I said, expecting a company to reduce its profits is foolish. Crying on this forum (when their network profit and subscribers are growing) is silly. This actually indicates that their pricing is probably at a good point. But, I guess supply and demand don't factor into this. When you look at penetration figures (at 145% iirc), the market is doing very well, and is not as expensive as you guys cry about.

 

[Moto Guzzi]

He just put a nail in the discount(pre-meditated) concept's coffin, what a laugh.

 

[f2wohf]

That profit that was posted? That doesn't include the re-investment into their networks.
And again, you're missing the point, this market doesn't allow for new entrants due to the spectrum issue.

The 15.6 billion is profits so the capex (investment) is deducted from it.

 

[f2wohf]

Let's just break this down.

Do you think that Vodacom would rather invest in another business (which business is going to be a major threat) instead of upgrading it's equipment to mitigate the lack of bandwidth? That business alliance will give Rain know how and bolster their revenue. And, you do realize that Vodacom puts billions back into its network? Do you think that this is done with outdated equipment or without a road map?

The first number is the capex investment, the second the revenues.

As you can see Cell C is rather heavily underinvesting (I included Orange because they have a big African market share too) compared to its peers and Vodacom is the second worst.

Vodacom 8.8/54.6 or 12.7% capital intensity
Orange 16.5% capital intensity
MTN 31.5/133
Telkom Mobile 8.6/40
Cell C 1.2/13

Obviously, a trend over a few years would be much more accurate but I'm really too lazy to go dig in each annual report of each operator.

 

[kianm]

Does airtime expire?

 

[kianm]

He said they are building a new system where customers will be warned when their in-bundle data is set to expire, and they will be given three options

If Hellkom did it before you then there is something wrong with you

 

[jannievanzyl]

Actually no. The thing that irks me the most and why I will respond here is because I was employed by a cellular network in the past. I know all the dirty tricks my friend, you would do well to tell the truth on public forums.

By telling the truth instead of defending the lies and taking us for idiots you'd earn some respect

So show where I'm wrong in my description of what is a service and what is a product and how access to the internet is not a service and I'll be all ears.

Saying you know "all the dirty tricks" is meaningless unless you expose them here, right?

 

[jannievanzyl]

They really MUST change the profile status or whatever its called of Jannievanzyl. He is no more a telecoms expert than I am an astronaut. Spin doctor and bullshitter yes.

Happy to debate the subject with you.

Where am I wrong in my description of how access to the internet works? Please enlighten us.

 

[jannievanzyl]

Also, there have been tons of incidents with Vodacom and MTN price fixing.

Any links on this? Sounds like there are a lot of them, even "tons". Keen to read them.

 

[jannievanzyl]

I understand what it is that Jannie tried to argue. Vodacom's average income per MB has decreased slightly over the years but what he fails to recognise is that data revenue has also been increasing.

But so has usage.

The way to calculate this is to take the total amount of data used and divide it by the revenue generated. This gives you the real price of data.

Do this for a few years and you'll see how the price has come down. You can find these numbers in the published results of all the mobile operators.

Or to put this another way, every year the data growth outstrips the revenue growth. What does this tell you?

 

[Speedster]

But so has usage.

The way to calculate this is to take the total amount of data used and divide it by the revenue generated. This gives you the real price of data.

Do this for a few years and you'll see how the price has come down. You can find these numbers in the published results of all the mobile operators.

Or to put this another way, every year the data growth outstrips the revenue growth. What does this tell you?

And yet profits continue to increase?

 

[Swa]

Let's just break this down.

Do you think that Vodacom would rather invest in another business (which business is going to be a major threat) instead of upgrading it's equipment to mitigate the lack of bandwidth? That business alliance will give Rain know how and bolster their revenue. And, you do realize that Vodacom puts billions back into its network? Do you think that this is done with outdated equipment or without a road map?

You're entirely missing the point I was making. Vodacom wants to continue with 2G indefinitely because of some businesses invested in it. I didn't say Vodacom was using outdated equipment even though 2G is definitely not current any more. If you don't take a real stance like some operators in other countries have done these companies will continue to hold the rest of us back with their outdated tech because it works for them. Vodacom doesn't have a road map or incentives to phase out old technologies. They are relying on just getting more spectrum indefinitely.

As for investing in other competitors, well we don't expect any company to do that. Why I specifically said regulations must force them to cooperate.

Not missing any point. If you guys think that a business will help create it's own competition to try hold onto profits is crazy speak. Or that a service provider will put outdated equipment onto its network. Maybe there is truth to what they are saying, don't you think? This is especially possible in light of ICASA being completely inept, and (IMO) and probably just as corrupt as the Guptas.

Like I said, expecting a company to reduce its profits is foolish. Crying on this forum (when their network profit and subscribers are growing) is silly. This actually indicates that their pricing is probably at a good point. But, I guess supply and demand don't factor into this. When you look at penetration figures (at 145% iirc), the market is doing very well, and is not as expensive as you guys cry about.

And there's definitely a problem when your competitor is more than 10 times cheaper. The market isn't doing anything near as well as it should be.

So show where I'm wrong in my description of what is a service and what is a product and how access to the internet is not a service and I'll be all ears.

Saying you know "all the dirty tricks" is meaningless unless you expose them here, right?

It's both a service and a product. You seem to have missed that economics class.

But so has usage.

The way to calculate this is to take the total amount of data used and divide it by the revenue generated. This gives you the real price of data.

Do this for a few years and you'll see how the price has come down. You can find these numbers in the published results of all the mobile operators.

Or to put this another way, every year the data growth outstrips the revenue growth. What does this tell you?

It tells me you're bullsh#tting us with marketing drivel. Show us where Vodacom has decreased the price of data significantly in the last 8 years of even slightly in the last 3. That is the only definition of a price decrease. Not when people have been making use of wholesale rates by paying more.

 

[wizardofid]

It tells me you're bullsh#tting us with marketing drivel. Show us where Vodacom has decreased the price of data significantly in the last 8 years of even slightly in the last 3. That is the only definition of a price decrease. Not when people have been making use of wholesale rates by paying more.

Exactly that, as I mentioned the 500mb bundle hasnn't changed in price since 2014. Neither has he even admitted the price hasn't changed, completely avoided the subject matter altogether.....that tells me more then enough.

And frankly but the end of the year I will be on a WISP don't care much what they do to their prices.....