Nothing complex about our tariffs – MTN

The company says its value proposition is the 'simplest thing in the world' to understand and that growth in its subscriber numbers and revenues back this up. By Duncan McLeod.

It’s “just not true” that MTN’s tariff plans are too complex and its consumers “totally understand the value proposition”, says MTN SA MD Karel Pienaar.

Pienaar was reacting to criticism that the company’s tariffs are too complicated for consumers to understand, especially in light of Cell C’s recent introduction of a uniform call rate of 99c/minute on per-second billing across its prepaid and contract packages.

Analyst firm Frost & Sullivan became the latest critic of MTN’s tariff plans this week, saying in a statement on Wednesday that the company is “likely to experience a sharp decline in revenues as its subscribers are expected to sign up to more competitive operators”.

“This will put a lot of pressure on group revenues as subscribers are likely to spend their income between MTN and its rivals,” Frost & Sullivan says. “If MTN SA replicates Cell C and Vodacom’s tariff plans, its revenues are likely to decline further, as the company cannot compensate the loss for airtime revenues with revenue generated by subscriber acquisition.”

But Pienaar tells TechCentral that MTN’s value proposition is the “simplest thing in the world” to understand. The company has been criticised, in particular, for its prepaid MTN Zone product, which offers call discounts depending on the time of the day and the area users happen to be in.

“You know what your price is and you know what your discounts are,” Pienaar says. “You can time and place calls based on [whether it’s] an emergency or not such an emergency and [consumers can] manage their money. Why do you think we’ve grown our revenue so nicely?”

In the six months to end-June 2012, MTN SA’s revenues rose by 9,5%, from R18,1bn to R19,9bn. Airtime and subscription revenue climbed by 5,9%, driven by prepaid subscribers, and revenue-generating minutes rose by 15,6%.

“Our value proposition is aligned to customers’ needs,” Pienaar says. “It’s about affordability and flexibility. Even in postpaid, you know what you’re paying. You get your bill every month and so you know what you pay. You can work out what your average is.”

He says it is “unfair” to say “simplistic packages are good for consumers”.

“All consumers have different calling patterns and so have different needs and we try and cater for those,” he adds. “We have tariff optimisers in each of our stores, which take your package and based on your calling patterns we can recommend for your upgrade that you move to this particular package. The guys are there to take existing packages and make sure customers are optimally positioned in that package for their needs.

“To think the consumer today, after 20 years [of mobile in SA], is so unsophisticated he can’t look at his bill and do comparisons [is incorrect].”

He says MTN Zone, which offers discounts based on the time of day and location of the user, “continues to be very successful”.

MTN SA says it expects 3m net additions to its network in 2012, a figure that has been revised upward from 2,9m six months ago. However, Pienaar says the more important number is revenue market share rather than market share based on the number of active Sim cards. “If you look at prepaid, we’ve moved it by a couple of percent; in postpaid we’ve moved it more than by a couple of percent,” he says.  — (c) 2012 NewsCentral Media