Contract versus Prepaid — You can save thousands on your mobile bill

Taking out a cellular contract may be a convenient option when buying a new smartphone but, over a 24-month period, it can cost you thousands more than buying your phone cash and using a SIM-only contract or prepaid bundles.

This is according to a MyBroadband comparison of the price of contract packages over 24 months, against the cost of buying a phone cash and purchasing your mobile service separately.

South Africa’s mobile network operators have a range of different contract offerings, including commitments that range from 12 months to 36 months that are available on a postpaid or top-up basis.

These contracts can include a device, but are also sold “SIM-only” for those who just want the mobile service and wish to bring their own smartphone or router.

Subscribers can also choose prepaid services, including bundles where you pay up-front and receive a set amount of data every month.

Considering that we are at the point in the annual smartphone release cycle where the price of flagship devices have already been substantially reduced since launch, we compared three different ways of buying a smartphone and cellular service to see which was cheapest.

The three options we compared were:

  • 24-month contracts that include a device and mobile service
  • Buying a phone cash, then taking out a 24-month SIM-only deal
  • Buying a phone cash and loading prepaid data and voice bundles

The mobile devices we compared are the Apple iPhone 12 Pro Max 256GB, the Samsung Galaxy S21 Ultra 5G 256GB and Huawei’s Mate 40 Pro 256GB. The retail prices from Takealot were as follows:

  • iPhone 12 Pro Max 256GB – R25,649
  • Galaxy S21 Ultra 5G 256GB – R24,799
  • Huawei Mate 40 Pro 256GB – R19,999

We compared deals on Vodacom and MTN to see how the different options compared.

Vodacom

The contract we chose for the Vodacom comparison was a 24-month Red 1GB top-up with 100 voice minutes.

As a SIM-only package, the Red 1GB top-up with 100 voice minutes works out to R5,496 over 24 months.

For the prepaid package, we opted for monthly purchases of a 1GB anytime data bundle at R85, and a 100-minute voice bundle which is R109. Over a 24-month period this totals R4,656.

The table below shows that on Vodacom, buying a phone cash and using prepaid data and voice bundles works out cheaper over 24 months than a contract.

Vodacom
Device 24-month Contract Total Buy phone cash + SIM-only contract (24 months) Buy phone cash + prepaid bundles (24 months)
Apple iPhone 12 Pro Max 256GB R33,576
(R1,399 x 24)
R31,145
(R25,649 + R5,496)
R30,305
(R25,649 + R4,656)
Huawei Mate 40 Pro 256GB R23,976
(R999 x 24)
R25,495
(R19,999 + R5,496)
R24,655
(R19,999 + R4,656)
Samsung Galaxy S21 Ultra 5G 256GB R32,376
(R1,349 x 24)
R30,295
(R24,799 + R5,496)
R29,455
(R24,799 + R4,656)

MTN

For the contract offering from MTN we selected the Mega Gigs XS Top-Up, which offers 1GB anytime data, 500GB social and 500GB video streaming data, and 25 voice minutes.

MTN offers the same deal in a SIM-only contract for R129 per month — totalling R3,096 over 24 months.

For the prepaid option we used MTN’s prepaid voice tariff of R0.99 per minute to make up 25 minutes of call time, and a 1.5GB bundle at R149 as a compromise for the extra social and video streaming data included on the contract we are comparing to.

Over 24 months, the prepaid products we’re buying for this comparion come to R4,170.

It should be noted that MTN’s personalised prepaid data prices may offer much lower prices than the base tariffs advertised by the operator.

For this comparison, buying your device from Takealot and combining it with the SIM-only MTN Mega Gigs XS Top-Up contract turned out the most cost effective.

Below is a table reflecting the different prices for the various combinations.

MTN
Device 24-month Contract Total Buy phone cash + SIM-only contracts  (24 months) Buy phone cash + prepaid bundles (24 months)
Apple iPhone 12 Pro Max 256GB R32,376
(R1,349 x 24)
R28,745
(R25,649 + R3,096)
R29,819
(R25,649 + R4,170)
Huawei Mate 40 Pro 256GB R23,976
(R999 x 24)
R23,095
(R19,999 + R3,096)
R24,169
(R19,999 + R4,170)
Samsung Galaxy S21 Ultra 5G 256GB R31,176
(R1,299 x 24)
R27,895
(R24,799 + R3,096)
R28,969
(R24,799 + R4,170)

Now read: Best smartphones under R3,000 in South Africa

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Contract versus Prepaid — You can save thousands on your mobile bill