How much Vodacom and MTN spend on their networks per subscriber

Vodacom and MTN spend far more on their networks in South Africa than elsewhere on the continent, which is why we enjoy world-class mobile services.

This is one of the factors which is often overlooked when people compare mobile data prices between different countries and operators.

Many South Africans, including politicians and journalists, continue to state that “South Africa has some of the most expensive data rates in Africa”.

This idea has become so entrenched that Communications Minister Stella Ndabeni-Abrahams has been tasked by President Ramaphosa with reducing data prices by 50%.

This statement is dubious at best. South Africa has some of the lowest-priced large data contracts – like 20GB or 50GB per month – in Africa.

Rain’s unlimited 4G service for phones, which currently costs R299 per month, is the best mobile data deal we could find in Africa.

The country’s fixed-LTE products from Rain, Telkom, Vodacom, and MTN also compare favourably with their African counterparts.

South Africans, therefore, enjoy some of the best mobile data prices in Africa for a wide range of products.

What is true is that South Africa’s prepaid data prices, especially from Vodacom and MTN, can be considered expensive.

There are, however, good reasons why Vodacom and MTN’s mobile data prices are more expensive than in many other African countries.

The two operators have less spectrum than in their other African operations, which increases the cost to roll out networks and increase capacity.

They have also built far superior networks in South Africa than in the rest of Africa. To do this costs more money, which in turn leads to higher retail prices.

Input cost versus price

To only compare the price of mobile data products between operators or countries without considering network quality is a mistake.

To produce a high-quality network with excellent coverage requires a far larger investment than producing a mediocre network with poor coverage.

The basic economic principle of input cost versus price holds as much for mobile networks as it does for cars or whisky.

The higher the cost to produce the product (in this case a mobile network), the higher the price of the product (mobile data) is expected to be.

People expect a Ferrari 488 to cost more than a Toyota Corolla, and they should also expect to pay more for data on a quality network than a mediocre one.

The most important thing is not the price of a single product but choice. The market should be sufficiently competitive to offer consumers a choice between products of varying quality and price.

This is the case in South Africa. You can buy affordable data products from Rain or Telkom on average networks, or more expensive products from Vodacom and MTN on excellent networks.

To understand why Vodacom and MTN charge higher prices for some of their data products in South Africa, it is good to look at their network investments and network quality.

The capital expenditure (Capex) in South Africa is much higher than in other African countries, and their network quality and coverage are also far superior.

To ensure a fair comparison, MyBroadband calculated the Capex per subscriber to take the country size and number of subscribers into account.

The data clearly shows that Vodacom and MTN spend far more per subscriber in South Africa than what they do in other countries, as shown in the tables below.

As the input costs are much higher in South Africa, it is no surprise that the retail product prices are also much higher.


Capex per subscriber

MTN
Country Subscribers Capex Capex per subscriber
South Africa 28.9 million R7.6 billion R263
Nigeria 64.3 million R8.0 billion R124
SEAGHA 48.5 million R5.0 billion R103
WECA 36.2 million R2.8 billion R77
MENA 72.9 million R1.9 billion R26
Vodacom
Country Subscribers Capex Capex per subscriber
South Africa 41.3 million R9.9 billion R239
International 38.6 million R3.4 billion R87

3G and 4G coverage

MTN 
Country 3G Coverage 4G Coverage Average
South Africa 98% 96% 97%
Nigeria 78% 44% 61%
Vodacom
Country 3G Coverage 4G Coverage Average
South Africa 100% 95% 98%
Lesotho 99% 84% 92%
Tanzania 59% 33% 46%
Mozambique 56% 25% 41%
DRC 31% 22% 27%

Now read: How to cut mobile data prices by 50%

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How much Vodacom and MTN spend on their networks per subscriber