The value offered to post-paid customers from MTN and Vodacom has decreased in the past 12 months, while smaller rival Cell C and mobile virtual network operator (MVNO) me&you mobile are offering improved contract deals.

This is according to a new “policy brief” from Research ICT Africa, which has found that South Africa’s smaller operators have increased the value they give to contract subscribers. As a consequence of this, Vodacom and MTN have lost post-paid subscribers, the research has found.

“South Africa’s dominant operators, Vodacom and MTN, increased the average price of post-paid contracts in the first quarter of 2016, following the mid-contract price hikes that took place in the second quarter of 2015,” Research ICT Africa said.

“Vodacom and MTN’s price increases have taken the form of increases in monthly subscriptions, or decreases in the quantity of bundled minutes, SMSes and data. While a few of the plans offered by Vodacom and MTN have remained unchanged or have decreased in price, most plans have undergone direct or indirect price increases.”

It’s the smaller industry players that have come to the table with aggressive contract deals, the research firm said.

“Contract users stand to gain the most in value by selecting from a range of these smaller operators and MVNOs, especially Cell C, me&you mobile and Telkom mobile.”

Research ICT Africa uses a tool it calls the Postpaid Value Index (PVI), adapted to a data intensive and smartphone heavy environment, to analyse post-paid price changes.

The PVI measures the value a customer gets for the monthly subscription price they pay in terms of bundled minutes, SMSes and data.

When the price of a plan increases, or there is a decrease in the number of bundled minutes, SMSes or data, the associated value of that plan declines on the PVI.

“Both MTN and Vodacom’s average value offerings on the index have dropped between the second quarter of 2015, when the mid-contract price increases were instituted, and the first quarter of 2016,” Research ICT Africa said.

“The average value offerings for all the smaller operators, Cell C, me&you mobile, Telkom Mobile and Virgin Mobile, have increased in the same timeframe.”

As of the first quarter of 2016, Cell C offers the highest average contract value at an average PVI value of 1,3, followed by me&you mobile at an average of 1,24.

A decrease in the value offering of Vodacom by 6%, from 0,67 to 0,63, can be attributed to an increase in the price of all its UChoose products (price increases took place in the fourth quarter of 2015), and its Smart product offering (price increases took place in the third quarter of 2015). This is despite decreases in the price of its UChoose Smart offering in the fourth quarter.

MTN’s average product value has also decreased, the researchers said. “This can be attributed to increases in the prices of its MTN MyChoice, MTN MyChoice Top Up and MTN off-peak products.”

MTN’s offerings on the PVI rank second to last when including MVNOs, and last when only comparing mobile network operators.

Telkom’s mobile division offered greater average contract value on the index than Vodacom and MTN in the first quarter of 2016, with an average PVI score of 0,69. Virgin Mobile offered the poorest average contract value at 0,6.

Telkom mobile offers the highest value to consumers in the high-end price range with its “Completely Unlimited” contract. Its product offerings on the other end of the scale — under R50 — are also highly competitive, according to the researchers.

Both MTN and Vodacom have secure revenue streams from their post-paid subscriber base, it said. “However, contract subscribers are not completely price insensitive and are likely to vote with their feet upon contract cancellation. This leaves MTN and Vodacom with not much scope to sweat their post-paid users further for additional revenue gains.”

The research firm said the South African market is “undergoing subtle changes as smaller operators customise their products and provide greater value in order to attract subscribers”.