In which I re-assert my self-appointed role of digitally holding African mobile operators’ feet to the fire for their rent-seeking behaviour.  In today’s spotlight is Vodacom South Africa.

Vodacom recently announced their Annual Report for 2010.  Vodacom is doing very well thank you very much and industry pundits gather to laud them for their hard work in the service of their shareholders.  But how well are they serving South Africa?  About two years ago, I started writing about the high cost of voice and SMS services in relation to income in Africa.  Have things changed much?  Here is a breakdown of Vodacom’s 4U pay-as-you-go offering in April 2009 versus May 2011:

Vodacom 4U Service April 2009 (ZAR) May 2011 (ZAR) Price Drop
General Service calls (Peak) 2.85 / min 2.58 / min 9%
General Service calls (Off-Peak) 1.12 / min 1.12 / min No Change
Vodacom to Vodacom (Peak) 2.85 / min 2.58 / min 9%
Vodacom to Vodacom (Off-Peak) 1.12 / min 1.12 / min No Change
Vodacom to MTN / Cell C (Peak) 2.99 / min 2.75 / min 8%
Vodacom to MTN / Cell C (Off-Peak) 1.30 / min 1.30 / min No Change
Vodacom to Telkom (Peak) 2.85 / min 2.75 / min 4%
Vodacom to Telkom (Off-Peak) 1.12 / min 1.30 / min -16%
SMS (Peak) 0.80 0.80 No Change
SMS (Off-Peak) 0.35 0.35 No Change

So the news is not all bad, prices have come down a little although critically SMS prices have not come down and in one case call charges have gone up, probably due to Telkom’s divestiture of Vodacom. Why did I choose the 4U plan? Well it is the one plan that is still the same after two years. Is it the cheapest plan? I have no idea. I’ve been to university but I couldn’t tell you which pay-as-you-go plan is best for me. They are deliberately constructed with a bewildering array of options which make calculating the right deal for you nearly impossible. So my choice is not scientific perhaps but hopefully representative.

Now, let’s turn to another Vodafone property, Kenya’s Safaricom. Same parent company, different pricing scheme. Here is their Ongea Tariff from May 2009 compared to today’s prices.

Safaricom Service May 2009 (KES) May 2011 (KES) Price Drop
Safaricom to Safaricom (Peak) 10 / min 3 / min 70%
Safaricom to Safaricom (Off-Peak) 10 / min 3 / min 70%
Safaricom to Other Network (Peak) 25 / min 4 / min 84%
Safaricom to Other Network (Off-Peak) 25 / min 4 / min 84%
SMS (Peak) 5 2 60%
SMS (Off-Peak) 3.5 1 71%

Quite a striking difference. It would be nice to give full credit to Safaricom but it is thanks to Airtel’s aggressive entry into the Kenyan market (their prices are even better) that obliged Safaricom to drop their prices. Also, note that in Kenya, effectively there are no more “plans”. It is 3Ksh/min on net and 4Ksh/min off-net. 1Ksh per SMS on-net and 2Ksh per SMS off net. I can understand that pricing plan.

So what does that mean in today’s terms?  Well, in Kenya, for a peak rate call to another network, you will pay about 4.5 US cents per minute and 2.2 US cents per SMS to another network (Airtel is 1.1 US cents).  In sunny South Africa, the price is 39 US cents minute and 11.4 US cents per SMS.  Yes, all in all about 9 times more expensive.  Does this blow your mind?  I can’t wrap my head around it.

Happily, Fair Mobile is back in action thanks to ResearchICTAFrica.  They have been researching mobile prices and looking for a good Macdonalds-style metric to compare pricing across countries.  Their first go at this was to compare cost of a litre of cooking oil to the number of minutes of airtime that you could purchase for that price.  Have a look at the presentation below.

But they have found something even more ubiquitous than cooking oil to compare to.  I won’t spoil the surprise though.  Stay tuned for more interesting results from them.

Posted by Steve Song

@stevesong local telco policy activist. social entrepreneur. founder of @villagetelco #africa #telecoms #opensource #privacy #wireless #spectrum #data