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Icasa: How the VAT hike pushed up your data costs

Oct 15 2018 17:32
Sibongile Khumalo

Vodacom has the most expensive standard voice tariffs for prepaid calls, according to a price analysis report released by the Independent Communications Authority of South Africa (Icasa).

Vodacom and MTN have increased their standard voice tariffs for prepaid cellphone users by 2.5% and 25.3% respectively. The changes mean that standard per second calling rate for Vodacom went up from R1.20 to R1.23, while MTN moved from R0.79 to R0.99.

Cell C has the lowest per second tariff plan at 66c. Telkom Mobile does not offer a flat rate tariff plan.  

The price adjustments were mainly due to commercial reasons and the VAT hike from 14% to 15% which came into effect on April 1.

The comparative price analysis covers the period from January 1 to June 30, 2018, in what is designed to ensure tariff transparency and potentially encourage competition.

Something old, something new

According to the report, Cell C has the lowest per second tariff plan at 66c, MTN offers 99c, Vodacom charges R1.23 per minute, which is the highest rate compared to all other major providers.

Unlike Telkom Mobile, both Vodacom and MTN tariff plans have the same pricing principle. 

One of the attractions for Vodacom and MTN is that their tariff plans offer free 57 additional minutes for a call of a duration of at least three minutes. The same does not apply for Telkom Mobile.

The report showed that telecommunication providers also altered their data bundle prices and size, with MTN replacing its 500MB bundle with 600MB and reduced the price of the 1GB bundle from R160 to R149.  

"The cost of data remains the biggest challenge for most South Africans," said Icasa.

The report highlighted the entry of the Stellenbosch-based start-up, Rain Mobile, with its "disruptive and innovative data offerings". Rain allows users to only pay for data they have used at the end of the month and has no contract lock-ins. Its 1GB data bundle is priced at R50.

"It was observed that over the period of five years smaller operators such as Telkom and Cell C have offered competitive voice per minute rate and lower data packages," said Icasa.

According to the report, mobile phone operators normally offer four types of prepaid tariff plans, the standard prepaid, promotional prepaid voice tariffs, standard prepaid for data and promotional prepaid and post-paid data tariffs.

Early this year, Icasa’s announced new regulations, which would have forced mobile operators to allow the rollover of unused data and notification of customers before enforcing out of bundle rates after June 8.

The implementation of the new regulations has been put on hold pending a court challenge mounted by MTN and Cell C. The companies are arguing that more time is needed to allow compliance.  

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mtn  |  icasa  |  vodacom  |  telkom  |  mobile companies
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