“Secret” report reveals truth about SA’s mobile prices

A mobile pricing report, based on research by two independent firms, debunks the long-held belief that low-end mobile subscribers in South Africa are getting a raw deal.

The Independent Communications Authority of South Africa (Icasa) recently told parliament that pre-paid mobile costs in South Africa were “way above” most other African countries.

ANC MP Livhuhani Mabija concurred, saying that the poorest of the poor are suffering because of the inability of Icasa to reduce mobile prices.

Communications minister Yunus Carrim reiterated this view, saying in September 2013 that South Africa ranks only 23rd on the African continent in terms of affordability of communication.

Carrim added that this worsens the “divide between the ‘haves’ and ‘have nots’ created by a past of inequality”.

However, these views are debunked by a report which shows that South Africa’s low-end mobile prices are well below countries with similar conditions to South Africa.

“Secret” report commissioned to find the truth

In 2012 South Africa’s mobile operators commissioned a report to establish how local mobile prices compare with international standards.

The report titled “Analysing the Cost of Mobile Communications” was done by two independent research firms – Strategy Analytics and Pygma Consulting.

What sets this report apart from other studies is that the research firms had access to sensitive information from Vodacom, MTN, and Cell C.

This information included the actual effective mobile tariffs paid by consumers, which guaranteed an accurate reflection of local prices.

The research firms selected 10 peer countries similar to South Africa based on demographics, geography, GDP and other relevant factors.

Seven different user profiles were then identified which reflect prices from a mobile user’s perspective.

Mobile prices were benchmarked against the peer countries, with the results taking purchasing power parity and tax levels into account.

Report and results kept secret

The sensitive nature of the information contained in the report means that the results were never made public.

It is understood that all the parties involved in this report, including the mobile operators, were sworn to secrecy through strict non-disclosure agreements.

However, after former MTN SA CEO Karel Pienaar presented some of the results to parliament in November 2012, curiosity started to grow about what the report revealed.

Research results

The “Analysing the Cost of Mobile Communications” report showed that the low-end of the South African mobile market received a very good deal when compared to the selected peer countries.

The high-end of the market paid more than their international counterparts for mobile services.

This report debunks the widely held belief that South Africa’s low-end market is receiving a raw deal, while high-end consumers score.  The reality is in fact quite the opposite.

South African mobile prices benchmarked
Basket Pre-paid voice, SMS and data Pre-paid voice and SMS Post-paid voice, SMS and data Post-paid voice and SMS
Low-income mobile subscribers
Low-low 65% cheaper 44% cheaper
Low 29% cheaper 11% cheaper 51% cheaper 38% cheaper
Medium 15% cheaper 5% more expensive 29% cheaper 10% more expensive
High 10% cheaper 23% more expensive 9% more expensive 80% more expensive
High-income mobile subscribers

Mobile pricing results summary

The report compared prices based on seven baskets – 4 pre-paid and 3 post-paid (contract) baskets. The baskets ranged from “low-low” pre-paid to “high” post-paid.

These seven baskets were broken into two groups – “voice and SMS” and “voice, SMS and data”.

The following summary of results show that low-end products serving low-income South Africans are cheap relative to the benchmarked countries, while high-end products serving the high-income segment are relatively expensive.

Voice, SMS and data
Pre-paid baskets Ranking/11 (lower is better) South African prices
Low-low 2 65% cheaper
Low 4 29% cheaper
Medium 5 15% cheaper
High 6 10% cheaper
Post-paid baskets Ranking/11 (lower is better) South African prices
Low 3 51% cheaper
Medium 6 29% cheaper
High 9 9% more expensive
Voice and SMS only
Pre-paid baskets Ranking/11 (lower is better) South African prices
Low-low 4 44% cheaper
Low 7 11% cheaper
Medium 7 5% more expensive
High 8 23% more expensive
Post-paid baskets Ranking/11 (lower is better) South African prices
Low 1 38% cheaper
Medium 8 10% more expensive
High 10 80% more expensive

Detailed results

The following graphs provide more detailed results from the “Analysing the Cost of Mobile Communications” report.

Voice, SMS and data baskets

Low-low prepaid basket prices - voice, SMS and data
Low-low prepaid basket prices – voice, SMS and data
Low prepaid basket prices - voice, SMS and data
Low prepaid basket prices – voice, SMS and data
Medium prepaid basket prices - voice, SMS and data
Medium prepaid basket prices – voice, SMS and data
High prepaid basket prices - voice, SMS and data
High prepaid basket prices – voice, SMS and data
Low postpaid basket prices - voice, SMS and data
Low postpaid basket prices – voice, SMS and data
Medium postpaid basket prices - voice, SMS and data
Medium postpaid basket prices – voice, SMS and data
High postpaid basket prices - voice, SMS and data
High postpaid basket prices – voice, SMS and data

Voice and SMS baskets

Low-low prepaid basket prices
Low-low prepaid basket prices – voice and SMS
Low prepaid prices - voice and SMS
Low prepaid basket prices – voice and SMS
Medium prepaid prices - voice and SMS
Medium basket prepaid prices – voice and SMS
High prepaid prices - voice and SMS
High prepaid basket prices – voice and SMS
Low postpaid prices - voice and SMS
Low postpaid basket prices – voice and SMS
Medium postpaid prices - voice and SMS
Medium postpaid basket prices – voice and SMS
High postpaid prices - voice and SMS
High postpaid basket prices – voice and SMS

More on mobile prices in South Africa

South Africa’s mobile prices compared

Cheapest prepaid mobile products in South Africa

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“Secret” report reveals truth about SA’s mobile prices