Cellphone contract cancellation: what you will pay

Cell C recently stated that its competitors are trying to stop subscribers from cancelling their contracts and moving to Cell C, by charging “excessive and unreasonable cancellation penalties.”

The network’s objections came a few weeks after it launched its Contract Buy-out promotion, offering up to R10,000 to anyone who wanted to cancel their contract with another network and switch to Cell C.

While the Consumer Protection Act lets service providers charge a “reasonable cancellation penalty”, Cell C argued that such a fee should only be used to recover the cost of the handset included in a contract.

“Unreasonable charges for future services that the customer will never receive is in contravention of the CPA,” the network said.

It said it had also been made aware of instances where network providers are charging customers more to cancel their contracts early than to stay in their contract for the full term.

The infographic below shows how much subscribers will have to pay their network to cancel a contract.

The cost of terminating your cellphone contract
The cost of terminating your cellphone contract

Vodacom early contract cancellation

Vodacom said it uses the following formula for contract cancellations:

Full Monthly Fee × months remaining × 75% + bill for outstanding usage

Since Vodacom’s cancellation fee is always a fraction of the remaining monthly fees, it said there is no scenario where its termination charge would be more expensive than keeping the contract.

Telkom early contract cancellation

Telkom said it requires subscribers to give a 20-business day written contract termination notice.

“The 20 business days written notice rule is within the CPA guidelines,” said Telkom.

It then uses the following formula to calculate the early termination fee:

R800 + Device Subsidy × months remaining + bill for outstanding usage

“We do not factor in the service fee for the remainder of the contract, as customers should not have to pay for the balance of the service that they are not going to use.”

MTN early contract cancellation

MTN said its early contract cancellation policy is to recover the outstanding device subsidy, and adds the next month’s subscription:

Device Subsidy × months remaining + next month’s subscription + bill for outstanding usage

However, a number of MTN subscribers have complained that their early-cancellation quotes were not based on this formula.

Instead, they were required to pay the remaining service fees on their contract, plus an early termination charge:

R1,710 + Service Fee × months remaining + bill for outstanding usage

Some subscribers complained that this resulted in their cancellation fee being more than just staying in the contract for the remainder of its term.

MTN was asked about this second termination fee calculation, but the company did not respond by the time of publication.

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Cellphone contract cancellation: what you will pay