South African mobile prices are cheap: report
A mobile pricing report, based on research by two independent firms, debunks the long-held belief that low-end mobile subscribers in South Africa are getting a raw deal.
The Independent Communications Authority of South Africa (Icasa) recently told parliament that pre-paid mobile costs in South Africa were “way above” most other African countries.
ANC MP Livhuhani Mabija concurred, saying that the poorest of the poor are suffering because of the inability of Icasa to reduce mobile prices.
Communications minister Yunus Carrim reiterated this view, saying in September 2013 that South Africa ranks only 23rd on the African continent in terms of affordability of communication.
Carrim added that this worsens the “divide between the ‘haves’ and ‘have nots’ created by a past of inequality”.
However, these views are debunked by a report which shows that South Africa’s low-end mobile prices are well below countries with similar conditions to South Africa.
“Secret” report commissioned to find the truth
In 2012 South Africa’s mobile operators commissioned a report to establish how local mobile prices compare with international standards.
The report titled “Analysing the Cost of Mobile Communications” was done by two independent research firms – Strategy Analytics and Pygma Consulting.
What sets this report apart from other studies is that the research firms had access to sensitive information from Vodacom, MTN, and Cell C.
This information included the actual effective mobile tariffs paid by consumers, which guaranteed an accurate reflection of local prices.
The research firms selected 10 peer countries similar to South Africa based on demographics, geography, GDP and other relevant factors.
Seven different user profiles were then identified which reflect prices from a mobile user’s perspective.
Mobile prices were benchmarked against the peer countries, with the results taking purchasing power parity and tax levels into account.
Report and results kept secret
The sensitive nature of the information contained in the report means that the results were never made public.
It is understood that all the parties involved in this report, including the mobile operators, were sworn to secrecy through strict non-disclosure agreements.
However, after former MTN SA CEO Karel Pienaar presented some of the results to parliament in November 2012, curiosity started to grow about what the report revealed.
Research results
The “Analysing the Cost of Mobile Communications” report showed that the low-end of the South African mobile market received a very good deal when compared to the selected peer countries.
The high-end of the market paid more than their international counterparts for mobile services.
This report debunks the widely held belief that South Africa’s low-end market is receiving a raw deal, while high-end consumers score. The reality is in fact quite the opposite.
| South African mobile prices benchmarked | ||||
| Basket | Pre-paid voice, SMS and data | Pre-paid voice and SMS | Post-paid voice, SMS and data | Post-paid voice and SMS |
| Low-income mobile subscribers | ||||
| Low-low | 65% cheaper | 44% cheaper | ||
| Low | 29% cheaper | 11% cheaper | 51% cheaper | 38% cheaper |
| Medium | 15% cheaper | 5% more expensive | 29% cheaper | 10% more expensive |
| High | 10% cheaper | 23% more expensive | 9% more expensive | 80% more expensive |
| High-income mobile subscribers | ||||
Mobile pricing results summary
The report compared prices based on seven baskets – 4 pre-paid and 3 post-paid (contract) baskets. The baskets ranged from “low-low” pre-paid to “high” post-paid.
These seven baskets were broken into two groups – “voice and SMS” and “voice, SMS and data”.
The following summary of results show that low-end products serving low-income South Africans are cheap relative to the benchmarked countries, while high-end products serving the high-income segment are relatively expensive.
| Voice, SMS and data | ||
| Pre-paid baskets | Ranking/11 (lower is better) | South African prices |
| Low-low | 2 | 65% cheaper |
| Low | 4 | 29% cheaper |
| Medium | 5 | 15% cheaper |
| High | 6 | 10% cheaper |
| Post-paid baskets | Ranking/11 (lower is better) | South African prices |
| Low | 3 | 51% cheaper |
| Medium | 6 | 29% cheaper |
| High | 9 | 9% more expensive |
| Voice and SMS only | ||
| Pre-paid baskets | Ranking/11 (lower is better) | South African prices |
| Low-low | 4 | 44% cheaper |
| Low | 7 | 11% cheaper |
| Medium | 7 | 5% more expensive |
| High | 8 | 23% more expensive |
| Post-paid baskets | Ranking/11 (lower is better) | South African prices |
| Low | 1 | 38% cheaper |
| Medium | 8 | 10% more expensive |
| High | 10 | 80% more expensive |
This article was first published on MyBroadband.
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