MTN lays down law on cheaper smartphones

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A model poses with a Samsung Galaxy S6, right, and Galaxy S6 Edge smartphone. (Ahn Young-joon, AP, file)
A model poses with a Samsung Galaxy S6, right, and Galaxy S6 Edge smartphone. (Ahn Young-joon, AP, file)

Cape Town – MTN has reiterated its desire to drive down the cost of smartphones, but had strong words for budget manufacturers.

“It is in our interest as MTN to have devices that are affordable in South Africa. The more people are using smartphones, those are the kind of people we really want as customers because they tend to consume a lot more data,” MTN chief executive Mteto Nyati told Fin24 last week Friday.

That view echoes MTN Group President Sifiso Dabengwa who told Fin24 in 2014 that the company - which has 227 million subscribers in Africa - was working with manufacturers to reduce the cost of smartphones.

However, Nyati said that some manufacturers were not prepared to pay to play.

“What differentiates those [companies] that you see appearing on our catalogues from those who do not is largely the marketing dollars – the marketing investment.”

Negotiations

MTN’s latest catalogue does not include devices from budget manufacturers Mobicel, AG Mobile, Karbonn and ZTE which retail their devices in the lower mid-range market.

The Samsung Galaxy Note 5 takes the front page of the latest MTN catalogue, in contrast to lesser known brands.

“What you find is that you are talking about a product that is not known. So somebody needs to make the investment in making that product known,” said Nyati, though adding that the operator made efforts to find more affordable devices.

Fin24 understands from a source that operators negotiate with manufacturers independently on what promotional spend will be included with new products.

Premium players such as Apple can usually demand concessions such as front page display in monthly catalogues and TV ads for its iPhone, while lower end manufacturers have far less clout with operators.

Reports indicate that Samsung is the biggest marketing spender, having dropped $13bn in its 2013 marketing budget, compared to Apple’s $1bn.

Despite a slowdown in sales and profit for the South Korean manufacturer, it consistently runs large marketing campaigns around flagship products.

“Who should be making that [marketing] investment? Is it us as the network, or is it the person who has built the product? We are of the view that the OEM must be the one to make the investment to market the product,” Nyati said.

Would you buy a cheap smartphone from a lesser known manufacturer? Let us know.


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