Telecom price wars: Which is the cheapest network?

In the highly competitive South African telecom industry, the battle for consumer affordability continues to intensify as major players like MTN, Cell C, and Vodacom vie for market share. The recent unveiling of MTN's MTN BozzaGigs LTE product, offering exclusive prepaid data bundles at competitive prices, has sparked a new wave of competition in the market. With MTN's price plan of 10 gigabytes for R99, consumers now have more options than ever before. The industry dynamics have shifted significantly over the past year, with the impact of COVID-19 leading to fluctuating prices and strategies among telecom companies. As Roy Mutooni, Analyst at Absa Asset Management, explains, the current landscape is not necessarily a price war but a consequence of evolving events and strategies that ultimately benefit consumers. Following the initial price cuts during the onset of the pandemic, companies like Telkom reversed their pricing strategies, while others like MTN and Cell C intensified their efforts to attract customers with innovative offers and deals. The focus has shifted from simply cutting headline prices to providing strategic offers that appeal to consumers' changing needs. Mutooni highlights the importance of savvy consumer behavior in navigating the complex telecom market, where special offers and promotions can vary widely across networks. While MTN's recent offer of 10 gigabytes for R99 may seem attractive, consumers are urged to shop around and compare deals to ensure they are getting the best value for their money. The emphasis on reducing churn and growing market share has driven telecom companies to be more proactive in their pricing strategies, leading to a competitive marketplace that benefits consumers. Despite pressure from regulatory bodies like ICASA to lower data prices, the extent of compliance and price reductions across the board remains a topic of ongoing analysis. While there have been some decreases in data prices, Mutooni believes more progress can be made, especially with the upcoming spectrum allocation and continued infrastructure investments. The discussion on data affordability extends beyond South Africa, with comparisons to regional and continental pricing highlighting the relative expense of telecommunications services in the country. Although South Africa remains on the higher end of pricing compared to other regions, factors like income levels and market dynamics play a significant role in pricing differentials. In terms of investment prospects, Mutooni provides insights into the performance and potential of major telco companies in the market. While MTN has shown resilience and continues to generate value through strategic initiatives, including asset sales and expansions, Cell C remains a viable option for investors seeking high dividend yields and stable returns. Telkom's position in the market is tied to its ability to adapt to competitive pressures and seize opportunities for growth. Overall, the telecom sector in South Africa presents a dynamic landscape for investors and consumers alike, with opportunities for innovation, value creation, and market expansion.