{"id":85613,"date":"2013-08-30T14:02:50","date_gmt":"2013-08-30T12:02:50","guid":{"rendered":"http:\/\/mybroadband.co.za\/news\/?p=85613"},"modified":"2013-08-30T14:03:45","modified_gmt":"2013-08-30T12:03:45","slug":"lower-prices-higher-profits","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/cellular\/85613-lower-prices-higher-profits.html","title":{"rendered":"Lower prices, higher profits"},"content":{"rendered":"

Research ICT Africa (RIA<\/a>) released a study benchmarking pre-paid mobile packages across Africa, showing that MTN<\/a>\u2019s South African prices are much higher than other countries where it operates.<\/p>\n

The Research ICT Africa study also showed that MTN South Africa\u2019s prices are higher than the prices of its competitors Cell C<\/a> and Telkom Mobile<\/a>.<\/p>\n

MTN questioned Research ICT Africa\u2019s findings, arguing that the quoted prices were 60 percent higher than the average MTN pre-paid package, and almost 80 percent higher than its cheapest.<\/p>\n

MTN further said that the report failed to account for differences between \u201cper-second and per-minute billing increments in its benchmarking, and that RIA\u2019s research methodology had \u201clittle to do with the reality of the costs MTN consumers actually face\u201d.<\/p>\n

Curiously MTN recently admitted that their failure to quickly respond to lower prices from its competition had a negative effect on the company.<\/p>\n

RIA hit back with the following arguments.<\/p>\n

MTN: The quoted prices are higher than the average MTN pre-paid package<\/strong><\/p>\n

RIA: We assume that MTN is referring to MTN Zone in its reference to MTNs lowest prices. RIA makes the following assumptions for dynamic pricing across Africa: On-net prices at 40% discount during peak time, 50% discount during off peak time and 60% discount during off-off peak time for on-net calls. For off-net calls RIA assumes a 10% discount. These assumptions are the same across Africa, i.e. the MTN Ghana vs MTN South Africa comparison is not affected. RIA has requested data from MTN to support its claims, but to no avail. In fact, the assumed discounts may well be far too generous. Someone working in town, having to co-ordinate daily life with a mobile during the day is unlikely to benefit from more than 10% discount for most of the time, for example. The invitation remains open for MTN to demonstrate that our assumptions are unreasonable.<\/p>\n

MTN: The report failed to account differences between per-second and per-minute billing increments in its benchmarking<\/strong><\/p>\n

RIA: Our baskets assume per second billing for all products. That makes some of MTN\u2019s products cheaper than they really are. CellC\u2019s and Telkom Mobile\u2019s products are all per second billing in comparison.<\/p>\n

MTN: RIA\u2019s research methodology had little to do with the reality of the costs MTN consumers actually face<\/strong><\/p>\n

RIA: Baskets are being used to allow objective comparisons across countries, operators and products. Individual use will of course differ from user to user not may be similar to the specified basket. Perhaps most telling is that consumers are voting with their feet. RIA\u2019s findings of MTN being more expensive compared to CellC and Telkom Mobile appear to resonate strongly with the experience of consumers. The latest interim result of MTN for 2013 indicate that MTN is losing prepaid subscribers and voice and SMS revenues. MTN lost about 700,000 prepaid subscribers compared to the last quarter of 2012. This is attributed by MTN itself to it not reacting quickly enough to the price war of the last year which had created a \u2018structural shift\u2019 in what people were prepared to pay<\/p><\/blockquote>\n

Lower prices \u2013 higher profits<\/h3>\n

\u201cThere is no point arguing with your customers. Rather see what your competitors are doing right,\u201d RIA said in response to MTN\u2019s feedback.<\/p>\n

\u201cMTN SA does not even need to look outwards from its own Group, it only has to follow leading continental performer MTN Ghana.\u201d<\/p>\n

RIA pointed out that the advertised prices for MTN Zone in Ghana are only a fraction of the prices of MTN Zone in South Africa, compared in US$ or in US$ PPP.<\/p>\n

\u201cAlso, the implied prices (ARPU \/ MOU) are much lower for MTN Ghana compared to MTN South Africa, while the EBITDA margin is higher,\u201d said RIA.<\/p>\n

\u201cLower prices – higher profits.\u201d<\/p>\n

More on mobile prices<\/h3>\n

Cheapest prepaid mobile products in South Africa<\/strong><\/a><\/p>\n

Mobile broadband quality in SA tested<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Research ICT Africa shows that MTN’s South African prices are much higher compared to other countries where MTN operates<\/p>\n","protected":false},"author":23,"featured_media":75911,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"idle","_sma_x_autopost_error":"","_sma_x_post_id":"","_sma_x_attempts":0,"footnotes":""},"categories":[14],"tags":[35,42,10626,8395],"class_list":["post-85613","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cellular","tag-headline","tag-mtn","tag-research-ict-africa","tag-ria"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/85613"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/23"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=85613"}],"version-history":[{"count":3,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/85613\/revisions"}],"predecessor-version":[{"id":85629,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/85613\/revisions\/85629"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/75911"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=85613"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=85613"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=85613"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}