Part 1: Why are broadband prices so high in South Africa compared to Kenya?

This is a sequel to my earlier post on the price war started by Cell C with its data specials that were introduced late in 2010.

While in Kenya on a social media assignment last week , a friend told me that he pays 1 Kenyan Shilling for an SMS. As at 1 October 2011, 1 South African Rand (ZAR) = 12.38 Kenyan  Shillings (KES). When I convert Kenya’s cost of SMS in South African currency, this comes to 8 cents. The cheapest SMS rate in South Africa right now is 15 cents. Thus, this is close to 100% more expensive than the Kenyan rate! Why?

I decided to perform a more comprehensive comparative exercise of the 2 countries above, but looking specifically at data costs – a deliberate choice given that this is the new gold for all telecom companies the world over. The results were startling, as the table below shows.

Comparative Data Costs - South Africa vs Kenya

Comparative Data Costs – South Africa vs Kenya

Keys: R – South African Rand. Ksh – Kenyan Shilling. MB – Megabyte 

Click here for clearer view of the Comparative Data Costs Table above.

Notes:

  • Only the top 2 mobile operators for each country were picked for comparison of data costs in the table above.
    • Safaricom alone has more than 70% of Kenyan mobile telecom market share, while Vodacom owns just under 60% of South African market share.
  • Data bundles and associated costs come from the selected companies’ websites as at 1 October 2011.
  • Only normal prices were used in the comparative exercise. Promotional prices were not considered.
    • In the case of Vodacom, only standard data bundle were used. Advanced data costs were ignored.
  • Kenyan prices were converted into South African prices, using the exchange rate (see column with GREEN fonts) as at the 1st of October 2011.
    • It is acknowledged that this exercise is being conducted during a period of high currency turbulence in both countries under review. However, it is assumed this affects them equally.
  • A quick glance over cost/megabyte for the selected companies can show that South Africa data costs are astronomical.
  • Safaricom and Vodacom have the widest data bundle offerings of the 4 telecom companies. As a result, their cost/mb were compared directly, as shown in cells with RED fonts. The last column clearly shows the magnitude of cost discrepancies between South Africa and Kenya for comparable data bundles.
  • I found it striking that close to 60% of MTN’s data bundles are sold by Vodacom as well, while Airtel’s bundles are unique from Safaricom’s. This may point to the high level of vibrant competition found in the Kenyan mobile market, which is limited or lacking in the South African market.

While I picked only data for the cost comparative exercise, this observed discrepancy occurs across all mobile telecoms cost items.

Related post: Mobile data usage to ramp up in South Africa in 2012… with provisos

This raises the question:  Why are South African mobile telecom costs so high? Is this because there is little separating data offerings by the two largest mobile operators?  Anybody knows?

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4 thoughts on “Part 1: Why are broadband prices so high in South Africa compared to Kenya?

  1. I was also in Nairobi a few days ago…i cam back on the 1st….and i can attest to what you have just depicted with the table above…its a pity how much we spend on an almost free service in East Africa.

  2. I was also in Nairobi a few days ago…i came back on the 1st, and i can attest to what you have just depicted with the table above…its a pity how much we spend on an almost a free service in East Africa.

  3. There are still too many SA consumers just taking the beating handed out by the telecom companies. What can we do? Well for starters, become a bargain hunter – and don’t settle for anything less than the cheapest option on the market, but try not to bind yourself in long-term contracts. We need to re-enforce competition, and not be so lackluster when it comes to change. Don’t just stick with your service provider because you got used to them.

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