MTN plans to reduce its out-of-bundle (OOB) data prices this year as part of an initiative to improve its data bundle adoption and revenue.
Speaking at the company’s financial results presentation for the six months ended 30 June 2018, MTN Group CEO Rob Shuter and MTN South Africa CEO Godfrey Motsa outlined the company’s plans to reduce OOB pricing.
“We have been reducing these rates basically across the whole portfolio,” Shuter told MyBroadband.
“We would rather people think about it as the pay-as-you-go rate rather than the out-of-bundle rate,” he added.
He said MTN has made revisions to its OOB pricing strategy in South Africa which it will implement this year.
Motsa said these changes will build on the reduced OOB data pricing for customers who use small amounts of data.
“We look at a certain segment which we call the vulnerable customers, and we reduce the OOB rate to 29c per MB for these users,” said Motsa.
“Once they reach a certain data usage threshold, this price moves up to 60c.”
The data usage threshold is less than 5MB per month.
Customers who use less than 5MB of data per month for three months in a row will only be charged 29c per MB out-of-bundle.
OOB plans and revenue
Motsa said MTN would also comply with regulations from ICASA while continuing to reduce its out-of-bundle rates.
“We will comply with the direction from ICASA around OOB notification or opt-in, and we are still going to continue decreasing the out-of-bundle or pay-as-you-go rate,” said Motsa.
“We have got solid plans to reduce these out-of-bundle rates in the second half of this year.”
Shuter noted that the percentage of MTN’s data revenue attributed to out-of-bundle data was declining, partly due to reduced rates.
Shuter added that he expects the percentage of data revenue attributed to OOB data to continue declining.
“We need to bring the rate down, and we have done that now across 19 markets,” he said.
“That will reduce the revenues, but it also puts customers on the path to move from not using data, to using small amounts at an affordable rate, and then moving into the bundle world.”
“As we get customers into the bundle world then of course the in-bundle revenues grow as well,” said Shuter.
He added that this strategy is manageable and would not reduce consumer spend on data.
“What we saw in the markets when we already made these big reductions was that a lot of the spend was still there.”
“If users recharge with R100 and maybe R10 is going towards data at a higher rate and now that is only R5, the customers are still recharging with R100 and that extra R5 goes to voice, SMS, or other services.”