Cell C contract price cuts here soon
Cell C dropped the price of their pre-paid voice calls to 99c per minute on Wednesday 16 May, and the company is now planning to also reduce its contract voice rates.
When asked on Radio 702 how serious he is about starting a price war, Knott-Craig said “I am not trying to start a price war. I am just trying to get market share, and that [lower prices] is one way to get it”.
Cell C’s new 99c pre-paid voice pricing means that pre-paid customers now pay less for voice calls than many contract customers, but Cell C is planning to rectify this situation with their lower contract voice rates.
“It is not that we have not thought about the contract customers – we have,” said Knott-Craig. “We have already designed our products for them and they will be coming out within the next month,” said Knott-Craig.
Great mobile pricing development
Arthur Goldstuck - World Wide Worx
World Wide Worx MD Arthur Goldstuck said that the latest Vodacom and Cell C pre-paid price reductions are among the biggest mobile price developments of the last decade.
Goldstuck added that lower contract prices will have to follow for Vodacom and Cell C to keep their high-value contract customers happy.
Another reason to expect significant contract voice price cuts from Cell C, Goldstuck explained, is because Cell C CEO Alan Knott-Craig is planning to shake up the full SA mobile market, and not merely the pre-paid market.
Goldstuck said that it was logical to reduce pre-paid prices first, because the prepaid market has a far higher churn rate and it is therefore much easier to win market share through lower pre-paid rates.
Another benefit of launching pre-paid prices first is that the company can assess the effect of these price cuts before making a final decision on their planned contract price cuts.
Alan Knott-Craig
Knott-Craig explained that they started with their pre-paid products because it involves the largest portion of their user base, and “quite frankly pre-paid clients have been paying far more than what they should be paying”.
Vodacom, which also cut their pre-paid call rates to 99c per minute, said that it has no immediate plan to cut contract voice rates. Vodacom spokesperson Richard Boorman added that they are constantly reviewing their prices to make sure that they remain competitive.
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