We are still cheaper than Cell C: Vodacom and MTN

Cell C has slashed the rate of its pre-paid and post-paid call costs to 99c per minute, but Vodacom says that these lower per-minute rates may not necessarily translate into an overall saving to consumers.

Cell C launched its “99 Cents For Real” prepaid tariff plan in May, and followed this launch with its six “Straight Up” packages, witch also offer call rates of 99c per minute, for post-paid and hybrid (Top-Up) customers on 22 June 2012.

Cell C’s 99c call rate is attractive to consumers because of the lower call rates and the simplicity of the products. All calls – including on-net calls, calls to other networks and international calls – are charged at exactly the same rate. There is also no difference between peak and off-peak rates.

Vodacom was quick to react to Cell C’s move, and launched a similar pre-paid product on the same day as Cell C. However, Vodacom’s offering was billed per-minute instead of per second, and did not include international destinations.

Vodacom quietly discontinued its 99c per-minute pre-paid deal on 31 July 2012, but the company said that it is still offering great value for money.

Vodacom’s new chief consumer officer, Phil Patel said that many of Vodacom’s customers experience lower rates than Cell C’s 99c per minute because of the company’s wide range of products targeted at specific market segments.

Patel pointed to Vodacom’s prepaid Day-Night Double free airtime promotion, where subscribers can get free on-net calls when recharging with R29 or more during the promotional period.

Nothing new from Cell C

Patel told MyBroadband that Cell C is not doing anything radical, as some observers may credit them with, and that many third market entrants (like Cell C) have done exactly the same in many other countries.

Patel explained that because Cell C has to pay fairly high interconnect rates to Vodacom and MTN, and the fact that their customers often roam on Vodacom’s network, the company had no other option other than launch a flat rate to remain competitive.

Because Vodacom and MTN have large market shares in the country, they can launch on-net promotions which adds value to their subscribers (their subscribers can, therefore, call many people at these reduced rates).

The value of on-net calls to Cell C and 8ta subscribers are far less because these two operators do not have as many subscribers on their networks.

Patel added that they are not losing market share to Cell C or 8ta. “Price is important, but it is not the only thing. Network performance, network coverage and the distribution channel is part of the overall value proposition,” said Patel.

MTN also claims to be cheaper

Vodacom is not the only company arguing that it offers better value for money than Cell C.

On 16 May 2012, only hours after Cell C unveiled its 99c tariff plan, MTN said in a press statement that its prepaid tariffs remain the most affordable in the market, despite pre-paid price cuts by its competitors.

“MTN has always placed heavy focus on understanding its customers’ needs and we continually review our prices and packages to meet those needs,” said Serame Taukobong, Chief Marketing Office at MTN SA.

Taukobong pointed out that their MTN Zone price plan consistently offers customers free calls through MTN’s unique offerings of Mahala Thursdays, Mahala Nights, Mahala Weekends and Mahala Day time rates.

MTN even poked fun at Cell C in its marketing campaigns which punts the fact that MTN subscribers can make free (Mahala) calls on their network.

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