Cell C has blamed the depreciation in the value of the rand against the US dollar for its decision, announced on Monday, to increase prices of a wide range of its prepaid and contract packages.
The mobile operator, which is in the throes of a major shareholder restructuring, said in a letter to its customers that it plans to implement the price hikes on 1 February.
Out-of-bundle data tariffs are going up by more than 10% on many of its tariff plans, while contract and data subscription charges are also being hiked. (See Big price hikes at Cell C for all the details.)
In a letter to customers, the operator said it intends submitting the amended tariff plans to communications regulator Icasa for approval.
The price hikes come amid a significant restructuring in Cell C’s shareholding that, if successfully concluded, will result in JSE-listed Blue Label Telecoms acquiring a 45% stake in the company for R5,5bn.
“Rising inflation, the depreciation of the rand against the dollar and uncertainty in the industry over the allocation of spectrum, have all contributed to an increase in the cost to provide mobile services to consumers,” the company said on Tuesday in a media statement explaining why it is putting prices up.
Cell C, long known as an aggressive price challenger in the South African market, said the single biggest input cost is network equipment, which is procured from international vendors. “This equipment is priced in dollars and any change in the rand has a significant impact on a company’s capital expenditure and operating expenses,” it said.
However, in the past 12 months, the rand has actually improved by 19% against the dollar. It was last trading at R13,68 to the greenback. In the past two years, it has weakened by 19%.
“Despite our best efforts to keep our prices unchanged, the rising cost to supply mobile network services has necessitated an increase in the price we charge the end consumer,” the company said in the statement.
“We have notified affected customers via SMS about the price changes that will take effect on 1 February 2017 and information is also published on our website. Customers who signed up for any of the Epic or Pinnacle contracts and who are still within their 24-month contract will be exempt from the price increase.” — (c) 2017 NewsCentral Media