Why Telkom is more expensive than Vodacom, MTN, Cell C

Cell C, Vodacom, and MTN cut their call rates recently, which means that Telkom‘s prices are now significantly more expensive than the mobile operators.

Telkom’s fixed line call rates were traditionally cheaper than the mobile operators, but after the price cuts in recent years the situation was reversed.

In the latest round of price cuts Cell C’s pre-paid call rates dropped to 66c per minute, while Vodacom and MTN charge 79c per minute. Billing is done on a per second basis.

Telkom in turn charges R1.30 per minute for calls to a mobile number during peak times, and R1.05 per minute during off-peak times. Calls are charged in increments of one minute for the first minute and in increments of 30 seconds thereafter.

The following table provides an overview of how current call rates between Telkom and the mobile operators compare.

Call destination Telkom off-peak Telkom peak Mobile off-peak Mobile peak
Cell C prepaid 66c 66c 66c 66c
Vodacom prepaid 79c 79c 79c 79c
MTN prepaid 79c 79c 79c 79c
Telkom fixed line 23c 46c 105c 130c

It is clear that Telkom is now far more expensive for calls to mobile numbers than Vodacom, MTN, and Cell C. This raises the question of why this is the case.

Telkom explained that it is cheaper for Cell C, Vodacom, and MTN to terminate calls on Telkom’s fixed network than it is for Telkom to terminate calls on their networks due to the imbalance between fixed termination rates (FTRs) and mobile termination rates (MTRs).

“The termination rate for Telkom fixed is currently R0.12 per minute whereas the termination rate for Vodacom and MTN is currently R0.20 and Cell C is R0.44 per minute.”

However, this was also true at the time when Telkom’s call rates were cheaper than the mobile operators. The answer may lay in the fact that Telkom did not pass termination rate reductions on to consumers.

When the first mobile termination rate cuts were introduced in March 2010 Telkom passed 100% of the savings on to its subscribers.

When the second round of MTR reductions kicked in on March 2011, Telkom only passed on a small percentage of the savings. More recent termination rate savings did not move Telkom’s retail rates much.

Peak and off-peak price difference

Telkom still charges different peak and off-peak rates for voice calls. This is curious as there is no longer a difference between peak and off-peak termination rates.

Telkom explained that the matter of peak and off peak rates is a legacy issue. “These rates were introduced originally to balance the network loading throughout the day,” Telkom said.

“As data is the growth area today and in the future, Telkom is analysing its tariffs and it is anticipated that peak and off peak rates for voice may be consolidated,” the company said.

More on call rates

Vodacom 79c prepaid promo

MTN 79c per minute prepaid call rate made permanent

Cell C slashes prepaid, contract prices

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Why Telkom is more expensive than Vodacom, MTN, Cell C