Last week and over the weekend we saw all 3 mobile operators reduce the prices of their data bundles by HUGE margins and while subscribers of all of theme celebrated, others, including myself, had a few questions. Were we previously being ripped off? What prompted the change?
Here are the responses given by all the 3 operators
I spoke to MTN Zambia CEO Charles Molapisi today:
What prompted the new rates, was it in response to Airtel’s reduction?
No, we have a product called MTN Matebeto who’s teaser we started showing a long time ago, it was always our plan to provide better data services to our customers. The program was always going to happen, we’re very clear about it.
Was the data bundle price reduction planned amongst the 3 operators themselves to jointly reduce data prices?
No, we don’t do anything like that, it’s illegal. We don’t plan go-to-market propositions as operators. We don’t know what the next one (operator) is doing. That would be a very big problem.
If you’re able to reduce the data rates by over 82% does that mean that subscribers have been overpaying for the services?
You first need to understand how the internet network works. If you look at the cost of rolling out 3G and 4G in Zambia, which is 756000 kilometeres squared and has got only 22.5 people per square kilometre, it’s quite a vast nation and the cost of deploying data here is far different from any other market, and if we’re to do fibre in Zambia will cost even much more . We are a landlocked country so we go through Tanzania, Zimbabwe Botswana and South Africa to get to the international cables. Costs are high, but the reason we do this (reduction) is because we believe as a business we’ve managed to get scale, increased the number of data customers – looking at the number of customers who are downloading over 5MB on the MTN network – and data penetration; we need other things to come to the party to start to build to bring prices of data down, and we have done so. These customers have grown so we have scaled, and once you’ve got scale you’ve got leverage to play dynamic build price.
So in other words, we’ve been paying for your infrastructure roll-out?
Everybody has to finance infrastructure and it costs a lot of money to make this investment. The process of reduction of prices takes long, it’s not quick but we believe that as a business we’re at a stage where we can build the technology and sustain it because it does not help to reduce prices and then when 5G comes in we don’t have the money to roll out because our prices are way too low and are unsustainable. The trick is to always build a business that is sustainable, that you can build with new equipment and new technology, and this will give customers the service. Our job is to always find the sweet spot, that balance, and that’s what we’re doing.
Is this revision permanant?
People must just watch out, there’s a lot more coming. Next year is the year of the customer under the MTN Matebeto.
He also added that the MiFi and Home Internet bundles have been reduced as of last Saturday when the reduction announcement was made.
In response to the questions: What prompted the price reduction in data bundles, has the cost of supplying it become low on your end, have some taxes been lowered for you, have subscribers simply been overpaying all this time?
Airtel responded with the following statement:
“As you are aware, we had embarked on a network modernization program, which has resulted in us launching the widest and fastest 4G network. We thank our subscribers for their patience and support over this period. The good news from this modernization is that not only has it delivered significant efficiencies and improved quality of service (QoS), it has also resulted in improved cost structure. The benefit of this has now been passed on to our customers as we support Government’s policy to improve the cost of doing business under the Smart Zambia Initiative. We will continue to improve our service offering as well as launch innovative products that will
give our customers a great experience. In the same vein we invite our customers to share their experience to help us continuously improve our service.”
Zamtel’s Corporate Communications Manager Kennedy Mambwe wrote in an email:
“Our price reduction is strategy driven and this was planned a while back. We have merely executed what we had sequentially planned and we are happy to provide the most affordable internet bundles to our customers.”
Satisfied with these answers? Got more questions? Comment below.