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Vodacom’s R2 billion in price cuts to consumers

Vodacom CEO Shameel Joosub said the company has cut the price of data by 37% over the past year, and this trend will continue in future.

The company’s financial results for the year ended 31 March 2019 showed that customer revenue in South Africa increased by 1.3% to R47.4 billion.

This subdued growth, Joosub said, was a result of tough economic conditions and because of the company’s price cuts over the period.

“We have given back more than R2 billion in price cuts to South African consumers,” Joosub told Moneyweb.

He said these price cuts were a proactive move against competitors and also served to reduce some of the price gaps to remain competitive.

The implementation of ICASA’s new regulations – which prevent automatic out-of-bundle charges and force mobile operators to roll over unused data – also had an effect.

The good news is that mobile data price reductions are set to continue, with another R2 billion in price cuts planned for this year.

Making it easier to reduce prices

Joosub urged the government and other regulatory entities to make it easier for mobile operators to reduce data prices.

He said the most significant obstacle to reducing input costs and, by extension, data prices is the fact that no new spectrum has been allocated in South Africa in the last 15 years.

“Lengthy delays in completing the digital migration and allocating 4G spectrum has curbed the pace at which data prices could have fallen,” Joosub said.

The lack of spectrum means that operators have to roll out more sites to increase coverage, which in turn costs a lot of money.

If Vodacom had access to more spectrum, Joosub said they would have been able to increase their 4G coverage from the current 90% to nearly 100%.

The biggest beneficiaries would be people in rural areas, who would get access to faster and cheaper data.

Now read: Mobile data prices – Here is what’s preventing price drops

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