Although the vast majority of South Africa’s telecommunications and technology companies will pass on the 1% increase in the value-added tax rate — from 14% to 15% — from 1 April, some are bucking the trend and absorbing the increase on behalf of their clients.
MTN South Africa said last week that it won’t pass on the higher VAT charges to its prepaid customers — although it is hiking some prepaid prices as part of an “overhaul” of the prepaid portfolio.
MTN significantly increased the per-minute charges on certain “legacy” prepaid calling plans, though the company said the increases will only affect a subset of prepaid users and are in no way related to the VAT increase.
Spokeswoman Jacqui O’Sullivan said the price increase was related to a planned overhaul of the company’s prepaid tariff plans, which will be phased in over the coming months.
“Customers making use of prepaid will not see a simple VAT increase on prepaid products,” O’Sullivan said. “Instead, MTN is sticking with the portfolio overhaul roadmap that was planned ahead of the VAT changes. Our post-paid base, which went through this portfolio transformation in 2018, will see a simple 1% VAT increase (on 1 April).”
Hosting company Hetzner, meanwhile, said on Monday that its customers’ hosting fees won’t be affected by the VAT increase. “After weighing up this important issue, Hetzner has decided to absorb the increase in VAT and not pass it onto our customers, keeping our pricing unchanged for as long as we can,” the company said in a statement.
“We don’t believe that the VAT increase is an adequate trigger for a price increase. There are a number of factors we do take into consideration when reviewing our pricing.”
It warned, however, that as global input costs continue to rise, it “might not be able to avoid price adjustments indefinitely”.
“But we prefer to look at price increases tied to improvements in our service. If an adjustment is required in the future, we will carefully consider the value we offer our customers.”
MultiChoice will also not hike prices on 1 April because of the increase in the VAT rate, though its regular annual adjustments will kick in on that date. The price increases were announced prior to government revealing that VAT would be rising on the same date.
The price of DStv Premium, MultiChoice’s top-end bouquet, will rise by 2.5% on 1 April 2018 — from R789/month to R809/month. Mid-tier bouquets, however, will see bigger increases, with DStv Compact Plus (formerly Extra) to rise by 4.1% from R489 to R509/month and DStv Compact going up by 5.5% to R385/month from R365 now. The lower-end DStv Family bouquet will see the biggest price increase — 6% — with the monthly fee rising from R235 to R249/month. DStv Access and EasyView remain unchanged at R99 and R29/month respectively.
Telecommunications provider Switch Telecom, meanwhile, said earlier this month that it has decided to reduce the impact of the VAT hike by effectively reducing its service fees.
“Switch Telecom will be reducing our standard monthly services fees and once-off charges by 1% as of 1 April 2018. Our clients will still pay the same VAT-inclusive rate for both standard monthly service fees and once-off charges.”
Call charges will remain at the same VAT-exclusive amount but will be subject to the new rate of 15%, it said. — (c) 2018 NewsCentral Media
MTN has significantly increased the per-minute charges on certain “legacy” prepaid calling plans, though the company said the increases will only affect a subset of prepaid users and are in no way related to the VAT increase from 14% to 15% taking effect on 1 April.
Those on the MTN Pay Per Second plan will see on-network and off-network calls rise by 25%, from 79c to 99c/minute, effective Friday, 23 March 2018.
MTN South Africa spokeswoman Jacqui O’Sullivan told TechCentral that the price increase is related to a planned overhaul of the company’s prepaid tariff plans, which will be phased in over the coming months. Despite the price increases, other customers are set to benefit from upcoming changes still to be announced, she said. They follow MTN’s overhaul last year of its contract pricing.
“Earlier this month, we introduced new data bundles. We have introduced the MyMTNOffers and we will be rolling out a series of new products over the next three months, all in line with the transformation of our prepaid portfolio,” O’Sullivan said.
“…Different products will be impacted in different ways and we will see new products also being launched,” she added. “In some areas, there will be price decreases, in others there’ll be increases and others will remain the same.
“Our focus is to create a product portfolio that better supports what our customers require from us and allows us to move away from outdated legacy products that no longer meet our customers’ needs.”
She said the changes are aimed at “simplifying the portfolio”. MTN has “analysed customers’ usage behaviour to allow us to tailor personalised offers that will be more relevant to each individual customer”.
“Customers making use of prepaid will not see a simple VAT increase on prepaid products. Instead, MTN is sticking with the portfolio overhaul roadmap that was planned ahead of the VAT changes. Our post-paid base, which went through this portfolio transformation in 2018, will see a simple 1% VAT increase (on 1 April).”
She said if affected customers want to change their prepaid plan in light of the price increases, they can do so through the normal channels.
The price changes are effective on 23 March (see table above for more details).
MTN has announced adjustments to its prepaid data bundles as well as pricing in a move it says is “in line with customer needs and market trends”. The new bundles and pricing, effective 5 March 2018, reduce what the operator calls “overlaps”.
For those bundles where a direct comparison between the old price and new price is possible — it removed some bundle sizes and introduced others — pricing has decreased for all monthly data bundles. These price drops range between 7% on the 1GB monthly bundle to 28% on the 20GB one. On average, pricing has been reduced by around 20%.
MTN has, however, discontinued the 500MB, 2GB and 5GB monthly data bundles, as well as the (completely illogical) 5MB one.
Price psychology is definitely key to some of these changes. For example, by removing the 500MB monthly bundle, subscribers now effectively get 600MB of data for R6 less (R99 vs R105). But, for “just” R15 more than the old 500MB price, they can get 750MB of data. It has surely run the numbers and figured out the price elasticity of demand with these new options.
In a similar manner, it has discontinued the 2GB monthly bundle (R260), but now offers 3GB for “only” R39 more (R299). By cutting the price of the 1GB bundle to R149 from R160, it also forces those customers who typically buy 1GB to choose between paying less for the same amount of data, or “just” R29 more than the old 1GB price for 50% more data (1.5GB).
It must be noted that the change in pricing to the 1GB monthly bundle has realigned MTN’s pricing with Vodacom’s and Cell C’s (previously, it was the most expensive).
It is no surprise that these changes which force subscribers into making new purchase decisions have happened around the 500MB and 1GB/2GB marks. These are very popular average monthly usage amounts, in the middle market.
In the lower end (under 300MB monthly), the price cuts are clearly designed to get subscribers to spend a little more than they used to in order to get more data. For example, a subscriber who previously bought 50MB at R25 is now “incentivised” to spend R29 for 100MB. The new 150MB monthly bundle at R39 achieves the same purpose, by incentivising subscribers who used to spend R35 on data to spend “just R4” more.
The operator has also introduced fairly competitively priced ultra-large monthly bundles (30GB, 50GB and 100GB) for which there is surely some demand (possibly in the small business space).
Click on the image above to see details of the new pricing
All but two weekly data bundles have been discontinued and replaced with new sizes. For example, the 100MB weekly bundle (which used to cost R15) again requires the subscriber to choose between paying slightly less for less data (R12 for 60MB), or just a little more for a more data (R17 for 120MB). While the effective price per megabyte reduces slightly (14c vs 15c previously), it is clear that the operator is, like with the monthly bundles, incentivising prepaid subscribers to spend more on data. The two weekly bundles which have not been discontinued, 500MB and 1GB, are now 22% and 8% more expensive, respectively. Aside from the monthly data bundle changes, MTN has also tweaked its weekly and fortnightly prepaid bundles and pricing. The single fortnightly bundle available (1GB) is now 24% more expensive (R110 from R89), and will without doubt incentivise those subscribers who previously purchased this to consider monthly or even weekly bundles instead.
Jacqui O’Sullivan, executive for corporate affairs at MTN South Africa, said: “The new packages aim to offer more for more, are competitive within the market and will reduce consumer worries of out-of-bundle bill surprises putting them in control of their data usage.
“By analysing customer patterns we’ve identified the need for these newly restructured bundles to ensure that customers’ data and usage is matched while letting them control their data spend. Ultimately, this gives more value for customers and more savings at the end of the month.”
Because of the increase in VAT from 14% to 15% on 1 April, pricing on all operators will change. Details of these amendments are scheduled to be announced this week.
The author, Hilton Tarrant, works at immedia. This article was first published on Moneyweb and is used here with permission
MTN South Africa is introducing a biometric fingerprint scanning system in an effort to crack down on identity theft in its retail stores.
The mobile operator said it has strengthened its security with the system ahead of the busy festive season, when crime rises.
“The biometrics will be used to authenticate the identity of post-paid subscribers when they undertake a range of transactions, including applying for a new contract or an additional Sim, performing an upgrade or Sim swap, and loading of chargeable value-added services,” MTN said in a statement on Wednesday.
“Furthermore, the system links to the credit bureaus’ expansive consumer database and can easily match customer’s fingerprints with their identity number.”
The company’s corporate affairs executive, Jacqui O’Sullivan, said: “So many South Africans have become victims of identity theft and a first stop for these criminals is often the retail environment. Our fingerprint biometric solution will go a long way in enhancing the experience of our customers and protecting subscribers from the scourge of identity theft.”
The fingerprint biometric system is being rolled out to all MTN stores and plans are in place to deploy this solution to the sales channels as well, O’Sullivan said. — (c) 2017 NewsCentral Media
Severe thunderstorms that struck Gauteng on Monday have knocked out a number of MTN’s high sites, the mobile operator said on Tuesday.
“Widespread power outages across many parts of Gauteng, as a result of yesterday’s severe storm, have in turn had an impact on some MTN infrastructure,” it said in a statement.
“Mobile generators have been deployed to as many of the affected sites as possible to power the sites and restore connectivity for our customers. Despite these efforts, approximately 80 sites remain without power,” it said in the statement, issued at 12.30pm on Tuesday.
“MTN South Africa is working diligently to restore services to those customers affected by this ferocious storm. We have activated our business continuity plan to ensure that services are maintained at the levels consumers and business customers expect,” said MTN South Africa executive for corporate affairs Jacqui O’Sullivan.
“The Yaldwyn power station that caught fire in Jetpark, in the east of Johannesburg, has also resulted in extensive power outages. Most of our transmission network and radio networks are equipped with battery backup and in some cases mobile generators,” O’Sullivan said.
“However, these are short-term solutions, so we are doing all we can to support the necessary power supply repairs that will get our services back up and running for our customers,” she said. — (c) 2017 NewsCentral Media