What you are not told about mobile data prices

ProfA

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The Elephant in the room is?

Your argument is based on MTN and Voda having capacity - How do you personally actually know what capacity MTNs network is running at? If you do please share it.

Changing network behaviour at night has nothing to do with the daytime distribution network and actually contradicts your excess capacity argument.

How do the per capita costs compare with other countries such as Europe or Aus?

You omit to point out how many years MTN and Vodacom ran without other competitors and coined it.

Both SPs have pushed hard against mobile VPNs over their data networks in anti-competitive behavior and have made it non routable inbound unless you get their "unrestricted" APNs that 99% of the population is unaware of.

Just look at the CEOs of both fat cats salaries and bonuses to know what profits they are making.

In any event the ever extending prevalence of WiFi and Mobile Voip will prove that the Mobile push as in 3g/4g/5g access is going to have a serious challenge.

agreed. RPM seems to be buying his own drivel.
 

rpm

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It sounded a bit like an industry sponsored piece. My conception (might be faulty but...) was that scarcity of spectrum was what was holding us back and causing the artificially inflated prices?
I think some operators may like the argument as this data is seldom shared or explained, but it is definitely not sponsored.

Regarding spectrum: It will help to make network roll-outs and increasing capacity cheaper, which is a good thing. However, my argument is mainly focused on quality, price and competition. To look at price in isolation, which is typically seen in articles (also from MyBroadband), gives a limited view of the commercial realities.
 

DXL

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It sounded a bit like an industry sponsored piece.

My conception (might be faulty but...) was that scarcity of spectrum was what was holding us back and causing the artificially inflated prices?

I kind off agree with you on it being an industry sponsored article.
 

rpm

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Your argument is based on MTN and Voda having capacity - How do you personally actually know what capacity MTNs network is running at? If you do please share it.

Changing network behaviour at night has nothing to do with the daytime distribution network and actually contradicts your excess capacity argument.

How do the per capita costs compare with other countries such as Europe or Aus?
Vodacom and MTN network capacity: No idea - will try to get some data on that. What I do know, however, is that large amounts of excess capacity is a bad thing. It is not coincidence that soon after Cell C dumped Vodacom for MTN, Vodacom made a deal with Telkom to start roaming on its network.

Per capita costs: Unfortunately the cost of network equipment does not decrease as the GDP per capita decreases. In fact,l it may well be more expensive in some third-world countries.
 

rpm

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I kind off agree with you on it being an industry sponsored article.
The only problem with your argument is that it is false.

It is similar to me saying you work for a company trying to hurt Vodacom and MTN. The accusation is easy to make, but it is baseless and adds no value to the conversation.
 

DTBA

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Vodacom and MTN network capacity: No idea - will try to get some data on that. What I do know, however, is that large amounts of excess capacity is a bad thing. It is not coincidence that soon after Cell C dumped Vodacom for MTN, Vodacom made a deal with Telkom to start roaming on its network.

Per capita costs: Unfortunately the cost of network equipment does not decrease as the GDP per capita decreases. In fact,l it may well be more expensive in some third-world countries.
Something I would like to know is.
A. Are we speaking about capacity in the sense of what their data center and international backbone can handle
or

B. What % of towers hits 100% capacity and peak times.
 

DXL

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My challenge in working out prices is as follows :

Rain offers data for R250 for 31 Days 589 Hours for the Month.

Assuming once uses data for 60 Hours of this Allocation.
We use this time for HD viewing of Netflix which is 3gigs per hour.

Which = 180 Gigs = R250

You go the Math R250 / 180 = R1-38 a Gig should be the price of Data in this context however there is much room for Data to come to a price of under R1 a Gig if the Full allocation is used.

Telkom Mobile offers R300 = 50 gigs Video + 5Gigs Any-data - 5 Gigs Social Media

R300 / 60 = R5 Gig

Now MTN & Vodacom want to charge R150 a Gig ?

I cannot make sense of it.
 

Dairyfarmer

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I posted
And what the article doesn't cover is how much the operators made from expired data. That is the data that we pay for and never use

But under the new censorship rules my comment was deemed to not be of value.

Well the operators keep crying about how their data prices have such small margins. But yet they make billions every year from expiring data. Either data not used or data that can't be used as the expiry periods are too short. And this is billions of rands that the operators receive without having to supply any infrastructure or supply services. In other words it's 100% nett profit. Like customers just handing them money and not getting anything back.

The fact that the operators make it extremely difficult for you to carry over unused data shows that they know the value to they of expired data. The operators will also say there is an expectation that not all the data they sell will be used because they have built the network around this.
 

Sodan

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I wish we got paid. It took a rather long time to pen this one :)

I am keen to hear opposing arguments based on financial figures like CAPEX and EBITDA margin. If we agree that a company should not run at a loss, we can start to argue on how to achieve lower data prices without harming profitability.

Hence, will increased usage compensate for the loss of revenue with lower data prices? Are the EBIDTA margins too high, and if so, what should it be? Should these companies increase efficiency, or possibly stop network investments.

To just say "cut prices" sounds nice, but that can be done for any product in the country. If that is the only argument, can we start with cutting the price of a BMW X5 to R50,000 ;)

How does MTN's EBIDTA compare to Vodacom, Rain and CellC?
How does it compare to other operators in countries similar to SA (w.r.t. economy and population, e.g. Kenya)?

Would you say that this comparison might shed some light on how accurate the oft-leveled accusation against MTN and Vodacom of "profiteering" actually is?
 

rpm

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How does MTN's EBIDTA compare to Vodacom, Rain and Cell C? How does it compare to other operators in countries similar to SA (w.r.t. economy and population, e.g. Kenya)?

Would you say that this comparison might shed some light on how accurate the oft-leveled accusation against MTN and Vodacom of "profiteering" actually is?
I agree this is worthwhile doing. We know Cell C is not profitable, but that has to do with many other factors (like a huge amount of debt). Rain does not disclose their finances, which means that comparison is not possible.

I think the big question is when can an operator be accused of profiteering? What is the objective measurement?
 

kianm

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Meanwhile 1 border north they are actively limiting and blocking the use of these dataz
 

RedViking

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I agree this is worthwhile doing. We know Cell C is not profitable, but that has to do with many other factors (like a huge amount of debt). Rain does not disclose their finances, which means that comparison is not possible.

I think the big question is when can an operator be accused of profiteering? What is the objective measurement?
Do we have access to data showing how much profit Vodacom/MTN makes from mobile data?
 

Sodan

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I agree this is worthwhile doing. We know Cell C is not profitable, but that has to do with many other factors (like a huge amount of debt). Rain does not disclose their finances, which means that comparison is not possible.

I think the big question is when can an operator be accused of profiteering? What is the objective measurement?

So have you managed to rule out other factors when doing EBIDTA calculations for MTN in various countries? If not, then perhaps the article is drawing a inaccurate conclusion from the comparison.

Objective measurement? None that I can think of. As far as I can see, it is relative to similar companies in similar environments. Hence my original post.
 

Jacobofski

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I subscribe to Cell C Black and because I have Cell C line I zero rated data as long as I have air time available. And can stream easily a 100gb data zero rated all for a hundred Rand a month. So they must make a pretty penny with the data they're selling to new able to afford the zero rating of your data. So don't tell me all this gibberish about speed. We have all heard these stories before. Suddenly the network operators is our biggest allies. So why is data much cheaper in developed countries with guaranteed speeds, for much less than we pay for it. Sorry the network operators are not our friends. My other network operator Telkom sells data for much less any of the other three operators and I am sure they don't sell their data at a loss. So the other three make huge profits on data. Just look at how much does Vodacom and MTN make on selling data alone. Sorry sir but your sales pitch is not working!
 

Swa

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What about OOB and LIFO? These practices indicate to me they are only out for making money and not our allies.

So have you managed to rule out other factors when doing EBIDTA calculations for MTN in various countries? If not, then perhaps the article is drawing a inaccurate conclusion from the comparison.

Objective measurement? None that I can think of. As far as I can see, it is relative to similar companies in similar environments. Hence my original post.
The problem with EBIDTA is that you can make the same from 1GB than from 10GB. It's not an objective measurement that tells you anything. CAPEX may be but then also how much you spend says nothing about how much your network is used.

The figures were just thrown in as fluff to distract from the real issues.
 

Sodan

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What about OOB and LIFO? These practices indicate to me they are only out for making money and not our allies.


The problem with EBIDTA is that you can make the same from 1GB than from 10GB. It's not an objective measurement that tells you anything. CAPEX may be but then also how much you spend says nothing about how much your network is used.

The figures were just thrown in as fluff to distract from the real issues.

While I don't disagree with you, it is evident that uncle rpm believes EBIDTA is of some significance. That's why I suggested we compare the EBIDTA of similar companies in similar environments. It may shed light on the issue of profiteering, or it may demonstrate EBIDTA to be a useless measure. Either way, it is a useful exercise.
 

Hennie_Mouton

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To compare the investment in LTE and other infrastructure, one should not exclude depreciation/amortization from comparisons, i.e. EBIT. Also, as some countries provide tax breaks for investments etc., one should not exclude Tax from comparison, i.e. EBI. So to judge whether you are being screwed or not by a public company, your should mainly compare earnings after all DTA deductions. Interest is the one that can be manipulated though, so it should remain EBI.

The whole problem with data prices in SA is lack of competition, which resulted in protection of certain players, who have been cartelling for years, and did not need to be more efficient. The situation is very similar to DSTV who had the whole market for years, and now tries to think up every excuse in the book to maintain the screw-the-consumer and/or remain inefficient.

That said, knowing all that does us no good, as it just inflates the blood pressure :) But, I agree with the OP in terms of this: it seems SA is on the right track.
 

Swa

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While I don't disagree with you, it is evident that uncle rpm believes EBIDTA is of some significance. That's why I suggested we compare the EBIDTA of similar companies in similar environments. It may shed light on the issue of profiteering, or it may demonstrate EBIDTA to be a useless measure. Either way, it is a useful exercise.
I don't have a problem with that in principle. I just don't think it should be a final measure. So if we are going to consider these metrics we should also consider ones that may affect them like company size and subscriber numbers. I'd like to see a proper formula instead of just throwing in numbers. Then we may be able to see how much extra they make from higher data prices.
 

Sodan

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I don't have a problem with that in principle. I just don't think it should be a final measure. So if we are going to consider these metrics we should also consider ones that may affect them like company size and subscriber numbers. I'd like to see a proper formula instead of just throwing in numbers. Then we may be able to see how much extra they make from higher data prices.

I think we are on the same page. The only difference is I would not (yet) want to introduce the other factors to measure, as I find that in general such an approach tends to completely sidetrack the issue with unresolved discussions on the other factors.
I would suggest that before we look at other metrics (like company size, etc), lets do a proper comparison on EBITDA for similar companies in similar environments, since the EBIDTA metric is the one uncle rpm seems to hold in highest esteem. Once we have confirm, or dismissed, EBIDTA's relationship with profiteering, we can progress the investigation by focusing on the next (set of) metric(s).

My point simply is: since uncle rpm brought up EBIDTA, then let's actually investigate EBIDTA (properly).

Thereafter we can look at other metrics.
 
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