MTN is joining South Africa’s escalating prepaid price war, taking an axe to its One Rate plan, cutting prices from R1,75/minute to R1,20/minute, or 2c/second, on per-second billing to all networks day or night.
The new tariff, which will take effect at the end of next week, has been lodged with the Independent Communications Authority of South Africa (Icasa) for approval. It undercuts Vodacom’s new prepaid calling plan, which also costs R1,20/minute but is offered only on per-minute billing, which makes the effective rate higher than MTN’s.
Vodacom offers 57 minutes of free calls to other Vodacom customers for every three billing minutes used (at a cost of R3,60), but MTN South Africa consumer marketing GM Mapula Bodibe says few customers need this.
She says the average call duration on MTN’s network is just 46 seconds. “The nuance in our products is not based on making a big splash but meeting customers’ needs.”
MTN has become the third mobile operator, after Vodacom and Cell C — the latter cut prepaid rates to 99c/minute on per-second billing to all networks last year — to reduce prepaid tariffs significantly.
However, MTN’s One Rate plan is currently used by only about 5% of the operator’s prepaid base. The vast majority use the popular MTN Zone, which offers dynamic discounts based on network load, the caller’s location, whether the call is to another MTN number or to another network, and the time of day.
MTN South Africa chief marketing officer Serame Taukobong has claimed for the first time that the effective average rate paid by MTN Zone customers is 88c/minute, or 11c less than the rate paid by Cell C customers.
It has been at the 88c level for the past seven months, down from R1,80 four years ago, Taukobong says, and will fall further in future. According to MTN, the average discount is 67% off the published full Zone tariff of R2,50/minute for on-net calls and R3/minute for calls to other networks.
Bodibe says that despite the battle being waged between Cell C and Vodacom over “headline rates”, MTN has experienced no increase in churn among Zone customers, with only about 2% of these clients moving away on a monthly basis.
“I’m confident we have the right formula,” Bodibe says. “From a competitiveness perspective, the headline rate argument doesn’t necessarily suit the customer.”
MTN says it now plans to increase the proportion of 100% discounts it offers to its clients on Zone. Nearly a third of the traffic made using Zone is carried at no charge to customers, the operator claims. — (c) 2013 NewsCentral Media
