Mobile providers engage in promotional price war
This, they are hoping, will boost their income following some lost revenue on mobile tariffs. Mobile companies are losing money after they engaged in a tariff price war earlier this year.
Vodacom released the Smart Kicka smartphone earlier this year, and has recently come out with a tablet. The company plans to connect South Africa with low-cost technology, bundled with data packages. This is due to the fact that mobile calls revenue is lowering as data favoured calls are increasing.
“Introducing high-quality, low-priced devices is just one leg of our three-part strategy to connect South Africa. The first leg is the network itself – we’re investing R9 billion across South Africa this year to expand both the reach and quality of our coverage. This means making sure that we have 3G coverage everywhere we have 2G and beefing up our systems to handle the huge data growth we see in the cities and townships,” said Phil Patel, Vodacom’s chief commercial officer.
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CellC is also trying to improve its deal offerings to customers in the form of free WhatsApp. “WhatsApp is one of the most popular over the top services on our network. We know that our customers are using it extensively to keep up with family and friends and we could not ignore the opportunity to add value,” said CellC CEO Jose Dos Santos.
WhatsApp is a popular social messaging site which allows users to send voice-notes, pictures and message across the globe. “WhatsApp is pleased to partner with Cell C as it presents this unique offering to users in South Africa. With over 600 million active users around the world, we remain focused on helping people communicate and stay connected in a way that has become a part of everyday life,” said Brian Acton, co-founder of WhatsApp.
CellC added that the free WhatsApp is just the first step. “This is just the first step in the game; we have much more planned in the social media space. We are embracing these technologies to enrich our own customers’ lives. This is yet another reason to port your number and switch to the network that offers you the most innovative products and services in the market, if you are not already on CellC,” said Dos Santos.
Vodacom customers will be able to buy the first 3G tablet designed specifically for the South African market, said Vodacom. Called the Vodacom Smart Tab 3G, it is a seven inch tablet and runs the latest Android 4.4 KitKat operating system. It is available on contract for R59 per month inclusive of 1GB of data each month.
“Just over a year ago we stepped back and looked at the devices currently in the market in South Africa and realised there was a massive gap. The smartphones and tablets on offer were either prohibitively expensive or cheap and badly specked. We sketched out what we thought the ideal specifications were for South Africa, and using the purchasing power of Vodafone’s global device team, we were able to have the device manufactured at a price point that works out at R2 per day,” said Patel.
The Smart Tab 3G is also available on a prepaid basis for R999. The prepaid device comes with 100MB of data each month for the first three months.
However, rival MTN is also set to launch a tablet soon. “MTN has made a firm commitment to facilitate universal access to communication services at affordable prices. MTN plans with regard to introducing an affordable tablet to the market are at the advanced stage and an announcement will be made in due course. Technical projects of this nature are very complex and it is often difficult to stick to definite time frames,” said Larry Annetts chief marketing officer of MTN South Africa.
In August Vodacom launched the entry-level smartphone called the Vodacom Smart Kicka. The phone is priced at R599, and runs the latest Android 4.4 KitKat operating system. The phone also has over four gigabytes (GB) of memory with a 3.5 inch screen, and a two mega-pixel camera.
Patel highlighted that in the first two months since launch almost a quarter of a million of these devices have been sold, clearly demonstrating that South Africa has a strong appetite for well-priced, well specked devices.
“At the moment only 27% of people living in South Africa’s emerging markets have access to smart devices. We aim to double that number in the next year. The Smart Kicka is not only affordable, coming in at around the US$50 (R553) level, but also offers the best from a technology perspective. Put simply it gives users the best possible internet experience without breaking the bank,” said Patel.
MTN pointed out to Justmoney that it too has similar affordable devices, such as the R499 Steppa smartphone. “The affordable smart device range captures the consumers wishing to migrate from a feature phone to their first smartphone, data usage from these consumers is growing depending on their needs. MTN has introduced a bouquet of low end devices such as the Pixie 7 and the immensely popular MTN Steppa that appeal to the needs of the lower end of the market,” said Annetts.
Annetts went on to explain that the rapid uptake of these devices has driven up data usage in this segment as consumers use these devices for a range of data applications including surfing the internet, accessing social media platforms, doing cellphone banking and instant messaging.
“As a testament to the initiatives that MTN has done to increase data usage for its prepaid customers, MTN has introduced a range of exciting data products including the Night Express Internet bundles that give prepaid customers the option to subscribe to a range of monthly data bundles for as little as R10 a month,” said Annetts.
Mobile providers are trying to boost revenue with lower data costs, entry-level smartphones and tablets to meet consumers’ growing technological needs. However, these revenue generation methods could be negatively impacted with plans to install free Wi-Fi in major South African city centres.. Though, some would argue that the increasing appetite for data in South Africa cannot be matched with small amounts of free Wi-Fi and thus better priced data packages will be needed.