Vodacom dismisses Cell C’s R10,000 ‘gimmick’

·18 May 2015

Vodacom Group CEO , Shameel Joosub, has dismissed Cell C’s new campaign to buy out its rival’s subscribers by paying them up to R10,000, calling it a “marketing gimmick”.

On Monday, Vodacom Group reported a 2.7% drop in service revenue to R47 billion for its South African operation during the year ended March 2015, impacted by a 50% cut in mobile termination rates (MTRs).

The group did manage to grow prepaid active customers in SA by 1.8% to 27.2 million, while contract active customers, excluding M2M, increased 2.5% to 4.9 million.

Joosub however, said that the reporting period was the toughest the group had ever faced.

“The key highlights of our story for the year were network investment, data growth, and pricing transformation.”

“This played out against a tough backdrop. In South Africa we faced major cuts in mobile termination rates, a weak economic environment, exchange rate volatility and increased price competition,” he said.

Last week, South Africa’s third largest mobile operator, Cell C said it will pay new customers up to R10,000 to cancel their contract with rival operators including Vodacom and MTN.

“We will buy your contract out to the value of R10,000” said CEO Jose Dos Santos. “Now we are going to give Vodacom a good smack,” he told journalists at the company’s head office Johannesburg.

Joosub retorted, saying that he was not overly concerned by Cell C’s initiative, calling it a marketing gimmick: “It presumes that customers want to leave.”

He said that the impact of such a move “will be very small” adding: “we aren’t going to roll over and play dead”.

Joosub said that all operators in South Africa were under pressure, but pointed to growth in data as a means to future momentum.