MTN boss admits: Data too expensive for the poor

Johannesburg - MTN CEO Rob Shuter admitted on Thursday that out-of-bundle data costs were exorbitant and needed to be fixed.  

The MTN boss said that while in-bundle costs were quite competitive, out-of-bundle data costs needed to be reduced. He committed MTN to probing solutions on how to make small infrequent sales of data more affordable to poorer South Africans.  

“We need to make sure that the cost of data is attractive to small, occasional peri-urban and rural users who buy small amounts of data at irregular intervals," he said.

The current commercial model across all of MTN's markets was not suited to that, Shuter admitted.

Speaking after MTN announced its financial results on Thursday, Shuter said the network needed to optimise out of data bundles and review its strategy. 

“The average price of data per gigabyte is not too bad in South Africa. It benchmarks emerging and developed markets. But for an entry level market, out-of-bundle data is not in a space it should be,” he added. “We have work to do at MTN on this.  But this is also part of a much more complex discussion."

• READ: MTN on recovery road as data, digital services boost revenue growth

Shuter explained that on a router deal that cost R350 customers were able to pay less than a dollar per gigabyte. 

"You can’t buy a gig for less than 15 dollars in other markets. At MTN we are moving with the tide but we still have work to do on this,” Shuter said. 

Previously, technology expert Arthur Goldstuck said that poor people could not afford bundles and were paying out-of-bundle rates of between R1 and R2 per megabyte.

“Networks are punishing poor people who are good customers," Goldstuck told Fin24. 

MTN showed improved financial results on Thursday spurred by data revenue growth despite “turbulence”, according to Shuter. 

Group revenue rose by 6.7% to R64 315m, with group service revenue up by 7.5% to R60 003m. Data revenue boosted results with a 31.9% increase to R13 952m, according to the consolidated financial results for the six months to end-June 2017.

Earnings before interest, taxes, depreciation and amortisation (Ebitda) increased by 3.1% to R21 179m and headline earnings per share stood at 217 cents.

MTN’s active Mobile Money customers also contributed to positive results, with an increase of 2.7 million to 17.9 million customers.