Foreign exchange rates directly impact the cost of devices from international manufacturers, causing South African operators to increase phone contract prices if the rand weakens.
This is because device manufacturers are primarily based overseas and set their pricing based on the local currency.
MyBroadband asked South African mobile operators how foreign exchange rates impact phone contract pricing after noticing that Vodacom had hiked its iPhone contract prices.
Vodacom, MTN, Telkom, and Cell C all confirmed that fluctuations in exchange rates could result in phone contract price increases.
“Yes, foreign exchange has a direct impact on the cost of the devices sourced and sold on contracts,” MTN SA’s executive for corporate affairs, Jacqui O’Sullivan, said.
Cell C’s COO Simo Mkhize said its contract pricing is subject to several factors, including foreign exchange rates.
“Cell C reviews its pricing on devices from time to time based on a number of factors including but not limited to the exchange rate,” he stated.
“We review our pricing in line with the changes in the rand-dollar exchange rate, and increases may be applied.”
Telkom explained that while its contract pricing is subject to changes based on foreign exchange rate fluctuations, it will not adjust pricing during the agreed-upon contract period.
“Once a price is agreed with the original equipment manufacturer, it becomes an input cost,” Telkom said.
“Telkom will not change the deal price (combination of device and tariff plan) mid-term due to currency fluctuations. Therefore, the price will remain the same for the duration of the 24 or 36 months contract.”
“However deals may change during deal cycles (June vs December) if the cost to procure has changed, and therefore prices for the same deal in a new deal cycle might have changed,” Telkom added.
Regarding Vodacom’s recent iPhone contract price increases, a Vodacom spokesperson told MyBroadband that fluctuations in the exchange rate had forced it to increase contract prices.
“There was a significant price increase on Apple devices due to the foreign exchange rate,” the spokesperson said.
“As a result, we adjusted pricing on certain packages bundled with Apple devices to align with the exchange rate.”