Vodacom to Cell C: ‘We will not roll over’

New Vodacom Group CEO has signalled his intention of taking the fight to his old boss, Alan Knott-Craig, by slashing international call prices. By Duncan McLeod.

Added by Duncan McLeod on 28 September 2012.
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Shameel Joosub

Shameel Joosub has been back at Vodacom — now as its group CEO — for only three weeks, but already he has slashed international call rates in reaction to a similar move by smaller rival Cell C, which is now headed by former Vodacom Group CEO and Joosub’s old boss, Alan Knott-Craig.

And Joosub has sent a message to his old boss: that Vodacom is not going to roll over for Cell C as the market gets more competitive.

Vodacom on Friday announced that it is cutting international call rates to 51 destinations within the next few weeks to 89c/minute. Calls will be offered on a per-second billing basis from the first second of the call, making them 10c/minute cheaper than the rates offered by Cell C.

However, consumers who want to take up the offer will have to pay R5/month for the privilege; there is no additional fee for Cell C customers. Cell C’s 99c/minute rate applies to 50 countries.

“We will react to the competition and beat the competition,” Joosub told journalists at a media roundtable in Sandton on Friday.

“There will be times when competitors do things before you do and you react to it. The point is not just matching it, but giving your customers even better value, and I think that’s what we’ve achieved with international calls.”

Asked by TechCentral what he thinks about competing with Knott-Craig and what he thinks of his old boss as a competitor, Joosub said: “I think Alan’s very smart. He’s been a leader in the industry. He gave me a lot of opportunities. He’s a very clever guy but he’s got his work cut out as well.

“Vodacom will stay competitive and Vodacom is not going to roll over,” he said, before adding: “It’s great competing with Alan.”  — (c) 2012 NewsCentral Media

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  • BritinSA

    I’m crap at numbers, but if Vodacom are 10c cheaper per minute, and you have to pay R5 to get the 10c discount, then Cell C is still cheaper provided you don’t talk for more than 50 mins a month.

    Did I get that right?

    Vodacom needs to pay attention to the fact that Cell C typically has little or no restrictions on its pricing. Every time they attach a string, the offer usually sucks.

  • http://www.facebook.com/comurray Colin Murray

    Why not slash the price of local calls as well or are we funding international calls. If this is the case it is most unfair.

  • nick_76

    Vodacom will now have to reduce local tariffs to 89c or below. They cannot expect to sell calls to the other side of the world for less than the cost of calling your mate down the road. I really dont see the SA consumer tolerating this any other way.

  • Davebee

    Wasn’t this the gang who told us all that their service was so good that they didn’t feel the need to go into a price war?
    I only hope that ICASA sees the madness going on here and FORCES this entire group of professional gougers to slash their local call rates. Before Christmas please!

  • PEET

    YOU WONT ROLL OVER- DONT WORRY- I WONT EVER BE BACK VODACOM!

  • Good Riddance…

    Vodacom and MTN have raped SA consumers for many years. I’ve ported my contracts to Cell C, and will never return to the bloodsuckers again. Just pop across to any Cell C outlet over a weekend and you’ll be queing for a contract, but it’ll be more than worth the wait! Too late Shameel, you just got schooled again!

  • John Mitchell

    I’m not tolerating it, I’m already porting my number to Cell C.

  • Dirk de Vos

    Very interesting study in economics. There is a Master thesis in oligopoly theory with an applied case right in front of us. While there was a duopoly, (MTN and Vodacom), we were gorged and badly so. Under conditions of duopoly with a relatively undifferentiated product, there is no need for actual collusion as has been alleged variously through the years and actually formally investigated in 2009 by the Competition Commission. In a duopoly pricing can be accurately modelled and predicted and it is never a good outcome for the consumer. Cell C probably started out wanting to share the economics of the big 2 but eventually found out that its margin cost/marginal revenue lines were too different from the incumbents and had to have more customers to justify the investment including the R5billion on its ZTE built 3G network. Cell C probably needs 35% market share to reach its desired IRR.

    With any luck, Cell C will continue to compete and not become part of the oligopoly as it increases market share.

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