Virgin Mobile ‘not necessarily cheaper’
High-end users would not get a better deal by switching. Middle volume users may find some benefits, but would be loath to give up the regular handset upgrades offered by the incumbents. Low-end prepaid users should stay away, said Kaplan, which is what Virgin wants anyway.
Virgin Mobile’s marketing manager Tristão Abro said its packages were clearly appealing, as it had been working flat out to sign up new users since it launched on Saturday.
He said: “The response has been very positive. We are ironing out the wrinkles but we are fully loaded in terms of signing up customers.”
Virgin’s VO prepaid package costs 235c a minute for the first five minutes of calls each day and 155c a minute after that. That would not appeal to most prepaid users as it costs R352 a month, which is a lot more than the average prepaid user spends, said Kaplan.
Virgin’s V100 competes more favourably with rival products, offering lower call fees but requiring a minimum monthly spend of R100. For a subscriber making 150 minutes of calls and sending 30 SMS messages a month, the average bill would be R310. That was 10% cheaper than rival packages. However, the rivals offered subsidised handsets worth more than the savings Virgin offered, Kaplan said.
At the high end, Virgin’s V500 was 4% dearer than rival packages, and again lacked the free top-of the-range handset the other operators offered. “Virgin will therefore not appeal to the high-end users. I certainly won’t switch,” says Kaplan.
Abro said he had analysed Kaplan’s comments and was dismayed to find the report was based on some very flaky assumptions.
The comparison had not factored in Virgin’s cash-back rewards which made its high-end packages 11% cheaper — not 4% dearer, he said. That 11% saving over 24 months would buy a top-range handset, or let users upgrade their handset every eight to 12 months.
Abro said Kaplan had also taken an equal weighting of peak and off peak usage, which was “completely wrong” as normal call patterns were 60% peak for mid-range users and more than 80% peak for high-end users.
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