Vodacom: Cell C’s R10k deal is a ‘marketing gimmick’

Vodacom has re-launched M-pesa to draw more people into the financial system. (Duncan Alfreds, Fin24)
Vodacom has re-launched M-pesa to draw more people into the financial system. (Duncan Alfreds, Fin24)

Johannesburg - South Africa’s biggest mobile network Vodacom has brushed aside the possible impact that rival Cell C’s R10 000 buy-back deal could have on the local market.

Last week, Cell C announced a plan to give customers up to R10 000 to help buy themselves out of contracts with other networks. Cell C said that contract cancellation fees hold back customers from switching networks.

Customers who then accept Cell C’s buy-back option can then join the mobile operator’s new ‘Epic’ contract plans.

Cell C chief executive officer José Dos Santos told Fin24 that the buy-back deal could last longer than an initially planned four month period, if the concept works.

But Vodacom CEO Shameel Joosub has dismissed the move in a conference call to journalists on Monday morning.

"It's a marketing gimmick," said Joosub.

"Firstly, it presumes that customers want to leave," he added.

Joosub went on to defend Vodacom’s record with keeping its customers happy.

In its annual financial results statement on Monday, Vodacom reported that it has experienced higher gross connections and a reduction in churn to 9.2%, “supported by a proactive retention campaign”.

Churn measures the level at which subscribers cancel their services.

"Our churn continues to drop," said Joosub.

"We've got the highest NPS (Net Promoter Score) in the country," he added.

The Vodacom CEO said he didn’t then expect Cell C’s move to impact greatly on other networks’ subscriber numbers.

"One would think that the impact of these things would be small," said Joosub.

Vodacom is South Africa’s biggest mobile network and on Monday it reported that its contract active customers increased 2.5% during the year to 4.9 million while its prepaid active customer base grew 1.8% to 27.2 million customers.

Meanwhile, Cell C announced last week that its subscriber base is 20.4 million with prepaid making up 60% of its overall service revenues.

Cell C is South Africa’s third largest mobile network.

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