{"id":52881,"date":"2014-02-10T00:05:40","date_gmt":"2014-02-09T22:05:40","guid":{"rendered":"http:\/\/businesstech.co.za\/news\/?p=52881"},"modified":"2014-02-10T10:34:28","modified_gmt":"2014-02-10T08:34:28","slug":"another-mobile-price-war-brewing-in-2014","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/mobile\/52881\/another-mobile-price-war-brewing-in-2014\/","title":{"rendered":"Another mobile price war brewing in 2014?"},"content":{"rendered":"

Investors are playing a ‘wait and see’ game in the mobile space after\u00a0the Independent Communications Authority of South Africa (Icasa<\/a>) halved mobile termination rates at the end of January.<\/p>\n

Starting in March 2014, MTRs will fall to 20 cents per minute from 40 cents, and will gradually decline over the next three years to 10 cents per minute.<\/p>\n

MTRs are the amount mobile phone companies have to pay each other to terminate calls on another network.<\/p>\n

The big question which may lead to a correction is whether Cell C and Telkom will trigger an\u00a0aggressive pricing move on the market.<\/p>\n

Nadim Mohamed<\/a>, investment analyst and partner at\u00a0First Avenue Investment Management<\/a>\u00a0noted that\u00a0MTN and Vodacom have reverted back to the levels they were trading at in mid-December.\u00a0“This after a strong run in the last few trading weeks of 2013.”<\/p>\n

Shares in Vodacom and MTN have both climbed since Icasa’s\u00a0announcement\u00a0on 29 January, albeit marginally.<\/p>\n

“In my opinion, the market is in \u2018wait and see\u2019 mode with MTN and Vodacom and the signal that will prompt a correction is an aggressive pricing move from a Cell C or a Telkom Mobile,” Mohamed said.<\/p>\n

“It is not clear yet whether the smaller operators have appetite for another round of price competition,” the analyst said.<\/p>\n

Cell C and Telkom respond<\/strong><\/p>\n

Telkom said that the new termination rates would \u201csubstantially contribute to reducing the cost of communication and the consumer will be the biggest beneficiary\u201d.<\/p>\n

\u201cTelkom will pass on reductions to consumers and will communicate these savings once it has fully assessed the impact of the regulations,\u201d the group said after Icasa’s announcement.<\/p>\n

Cell C\u2019s chief financial officer,\u00a0Robert Pasley<\/a>, told Techcentral that \u201cCell C\u2019s rates are already very competitive, so consumers shouldn\u2019t expect dramatic price reductions\u201d.<\/p>\n

Cell C said in an official statement that the new rates will promote and foster a more balanced and competitive mobile industry to the benefit of consumers.<\/p>\n

\u201cBy increasing its share of the market and putting further pressure on the dominant competitors, Cell C is confident it can drive access to more affordable communications for all South Africans, even those not on its network,\u201d Cell C said.<\/p>\n

Further direction needed<\/strong><\/p>\n

Mohamed noted that MTN and Vodacom may well challenge Icasa legally as an effort to delay the MTR cuts in March.<\/p>\n

“I expect that MTN and Vodacom will trade side-wards until there is more direction on two issues.”<\/p>\n

Mohamed\u00a0commended Vodacom on excellent execution of its pricing transformation strategy in SA.<\/p>\n

Vodacom shrugged off new call termination rates (CTRs) by announcing a 10.5% rise in group revenue to R20.2 billion for the\u00a0quarter ended December 2013.<\/p>\n

“The ability to manage elasticity through the new price plans has enabled it to retain subscribers and ARPU during a period of sharp declines in tariffs.\u00a0 It was so successful that they\u2019ve even been able to attract new prepaid customers,” the analyst said.<\/p>\n

Vodacom said that group active customers grew 12.3% to 56.0 million.<\/p>\n

Active prepaid customers increased by 5.7%, minutes of use\u00a0grew by 21.5% and ARPU was flat at R80, while active contract customers grew 1.7% to\u00a04.8 million, with ARPU declining 3.9% in the quarter to R393.<\/p>\n

“MTN have been slow to react in terms of pricing strategy in SA and this has possibly resulted in loss of prepaid market share to Vodacom.\u00a0 As far as I can see, within the SA market, Vodacom are well ahead of MTN in its strategy to mitigate against the negative effects of MTR cuts\/asymmetry,” Mohamed said.<\/p>\n

More on Vodacom and MTN<\/h3>\n

New termination rates \u2013 will you see lower prices?<\/strong><\/a><\/p>\n

Telkom to pass on CTR cuts to consumers<\/strong><\/a><\/p>\n

Vodacom lifts quarterly revenue by 10.5%<\/strong><\/a><\/p>\n

Expect poorer quality from Vodacom and MTN<\/strong><\/a><\/p>\n

Vodacom: MTRs could cost us R1 billion<\/strong><\/a><\/p>\n

Drastic call termination cuts announced<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The big question which may lead to a correction is whether Cell C and Telkom will trigger an aggressive pricing move on the market.<\/p>\n","protected":false},"author":9,"featured_media":50234,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34],"tags":[42,2160,26,36,28,3757,7426,65,27],"class_list":["post-52881","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mobile","tag-cell-c","tag-first-avenue-investment-management","tag-headline","tag-icasa","tag-mtn","tag-nadim-mohamed","tag-robert-pasley","tag-telkom","tag-vodacom"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/52881","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=52881"}],"version-history":[{"count":7,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/52881\/revisions"}],"predecessor-version":[{"id":52897,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/52881\/revisions\/52897"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/50234"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=52881"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=52881"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=52881"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}