24 vs 36 months – The total price of a smartphone contract

South African mobile operators offer several flagship smartphones on two- or three-year contracts.

Three-year contracts cater to customers who want to keep their devices for longer than the standard two-year period.

According to a report from Hyla Mobile Inc, iPhones traded in during the first half of 2018 were 2.92 years old on average, up from 2.37 years in a comparable period two years earlier.

At the beginning of 2019, Apple blamed a decline in smartphone revenue on fewer people trading in their old models.

This was further supported in research from Kantar Worldpanel. In 2016, the average US smartphone owner used their device for 22.7 months before upgrading. In 2018, this had climbed to 24.7 months.

European users were even more attached to their old phones, with a life cycle average of 26.2 months between participants from five major countries.

2019 was also the first year in which global smartphone sales declined since the first Apple iPhone was launched in 2007.

36-month contracts

As top-of-the-line flagship prices have climbed over the R25,000 mark and the average lifecycle of smartphones has increased, some mobile operators have started offering longer-term mobile contracts.

Both MTN and Vodacom offer flagship smartphones on contracts with either 24- or 36-month terms.

We compared the total prices of their two-year and three-year smartphone contracts with the retail prices of the available smartphones to see which offered the best value for money.

The retail prices we used for the latest flagship smartphones from Apple and Samsung are as follows:

• Apple iPhone 11 64GB – R16,999
• Apple iPhone 11 Pro 64GB – R26,499
• Apple iPhone 11 Pro 256GB – R28,999
• Apple iPhone 11 Pro Max 64GB – R28,999
• Apple iPhone 11 Pro Max 256GB – R32,999
• Samsung Galaxy S20 128GB – R22,999
• Samsung Galaxy S20+ 128GB – R25,499
• Samsung Galaxy S20 Ultra 128GB – R32,999

Prices for the contracts were sourced from Vodacom and MTN’s websites at the time of publication.

Vodacom

For Vodacom, we used the Smart Data 1GB contract. This includes an allocation of 1GB data, 75 voice minutes, and 25 SMSs per month.

To compare fairly, we added a 1GB data bundle (R99), 100 voice minutes (R109) and 20 SMSes (R10) for each month to the prepaid price.

For a 24-month period, this would amount to R5,232, while 36 months would cost R7,848.

We found that in most cases, the contracts provided better value for money. However, this was not the case for the iPhone 11 range.

There was a particularly big discrepancy between prepaid and total contract prices for Apple’s smartphones, with the iPhone 11 Pro Max priced at around R4,500 more on a 36-month contract than on a comparable prepaid option.

For Samsung smartphones, total prices were always cheaper over 24 months.

The table below compares the total contract pricing with comparable prepaid prices on Vodacom for the same duration.

MTN

MTN does not offer 36-month contracts through its online store.

The operator’s most affordable contract option is its Made for Me XS Small contract. This includes an allocation of 500MB anytime data and 500MB night data, with 50 voice minutes and 50 SMSs.

MTN’s prepaid price for a monthly 1GB bundle is R99. Adding R70 for 50 anytime minutes and R17 for a 50 SMS bundle puts the total additional monthly spend on prepaid at R186.

Over the course of 24 months, this would bring the total amount to R4,464 added onto the prepaid price.

All of the Galaxy S20 contracts worked out to be more affordable than buying the phones on prepaid and buying the same amount of data, minutes, and SMSs each month.

The iPhone 11 smartphones were substantially more expensive over a 24-month contract than on prepaid.

The table below compares the total contract pricing with comparable prepaid prices on MTN for the same duration.