Johannesburg - Mobile network Cell C provided the best value on its post-paid contract offerings in the first quarter of 2015 in South Africa followed by Telkom Mobile, according to Research ICT Africa.
The research organisation has studied the local mobile contract market and put together what it calls its post-paid value index (PVI) as part of an updated policy document released last week Friday.
The PVI measures the value customers get in terms of their monthly mobile contract subscription costs. Research ICT Africa has determined this PVI rating by adding the value of bundled minutes, SMS and data and then dividing that figure by the monthly subscription fee.
So, the researchers value one minute at 10 US cents, one SMS at 1 US cent and one MB data at 10 US cents. The researchers say that, for example, a contract with 25 minutes, 50 SMS and 100MB data bundled, with a monthly subscription of US$10 will then have the following PVI: PVI =(25X0.1+50X0.01+100X0.1) divided by 10 =1.3.
This means that the consumer gets 1.3 times the value of the monthly subscription.
According to this methodology, South Africa’s third largest mobile network Cell C offers the best value for money with the highest PVI in eight monthly subscription categories while it also holds the contract with the highest PVI in the first quarter of this year.
“Its Infinity Select product scores a PVI of 21.07 and at R999 it is the cheapest unlimited voice and SMS package. It comes with 10GB data. The average PVI of all of Cell C’s contracts was 7.35 in Q1 2015,” reads the report.
The researchers say that they only looked at the face value of what’s on offer and not the quality of the network.
Cell C has been criticised by the likes of Fin24 users for not having adequate network coverage across all areas in South Africa.
READ MORE: Signal woes may hamper Cell C's R10k buy-back plan
Cell C announced this year that it is investing R8bn in an LTE network. But even from this perspective, Cell C is catching up with rivals Vodacom, MTN and Telkom Mobile, which all have LTE networks already.
“So, Cell C is offering the best value measured only in terms of the amount of minutes it’s offering, the amount of data it’s offering, and the amount of SMSs it’s offering on its post-paid, i.e. contract products,” Safia Khan, a researcher for Research ICT Africa, told Fin24.
“We’re not looking at the quality of service or the quality of the connection or the speed of the data...just at face-value, what you’re getting, what you’re paying for,” she said.
Cell C scored the highest average PVI for the first quarter of this year, say researchers. (Research ICT Africa)
The Research ICT Africa report further says that Telkom Mobile contracts offer the second best value in South Africa.
“The average PVI (of Telkom Mobile) was 6.48 and its Unlimited product scored 15.04 on the index,” reads the report.
Meanwhile, Vodacom’s PVI ranked third at 2.87. Vodacom’s best PVI product is Smart Red VIP which has a PVI of 7.59 for a monthly subscription rate of R1 999.
MTN has the lowest overall PVI of 1.33. The only product of MTN that provides a significant PVI is My Sky without a handset at a monthly promotional subscription price of R1 299. This contract has a PVI of 16.2.
Cell C attacking the postpaid market
South Africa’s third largest mobile network Cell C is trying win more market share in the post-paid market after launching its ‘buy-back’ offering earlier this month.
Cell C is willing to pay up to R10 000 to buy consumers out of their existing mobile phone contracts with rivals such as Vodacom and MTN.
READ MORE: Cell C wants to buy your old contract
Research ICT Africa’s Safia Khan told Fin24 that the R10 000 buy-back offer is unlikely to add more value to Cell C’s contracts.
“I think that’s more of a competitive strategy really.
However, Khan said that Cell C’s R10 000 offer is positive for market competitiveness.
She also said that the buy-back offer is probably not a core strategic policy of Cell C at this stage but rather a move that is ad-hoc to its wider play on the market.
“So, everyone increased their prices. Consumers feel like they’re locked in; they have to pay high termination fees to get out of their contracts, and so Cell C is just playing market dynamic games,” Khan told Fin24.
“And they’re (Cell C) going to recuperate that R10 000 or R5 000 if you sign a contract with them,” she added.
In addition, Khan has highlighted how Cell C’s Epic buy-back contract plans don’t provide much value for consumers either. Her research indicates that the Epic plans drag down Cell C's average PVI rating from 7.35 to 5.37 for the month of May. This means that Cell C in May falls behind Telkom Mobile which has an unchanged PVI rating of 6.48. (View the PVI ratings of Cell C's new contracts below.)