MTN makes voice calls free 

MTN surprised the South African mobile market by launching new products which include unlimited free calls and SMSes with a data package.

Dubbed MTN SuperFlex, it introduced a step change in local telecommunications by offering unlimited voice minutes and texts with a customisable data allocation from R299 per month. 

MTN SuperFlex is an online, SIM-only, month-to-month tariff plan that promises simplicity, customisation, and flexibility.

“No paperwork, no contract lock-in, no credit checks, and unlimited calls and SMSs,” MTN announced last week.

The base package for R299 per month includes 10GB of data. Subscribers may upgrade this to 15GB for R399 or 20GB for R479 per month.

It also includes a complimentary six-month subscription to Disney+. MTN also offers the option to add certain mobile devices to the plan for a once-off fee.

MTN said there is no fair usage threshold for unlimited voice minutes and SMSs. However, an acceptable use policy applies, which stipulates that the voice and SMS features are for consumer use only.

The launch of MTN SuperFlex is set to disrupt the telecoms sector in South Africa as it is the first product to offer unlimited voice and SMS as a free add-on.

This follows global trends where telecom giants in more developed markets such as the UK, USA, and Europe provide unlimited voice alongside paid-for data services. 

For example, O² in the UK offers unlimited voice minutes and texts for all of its data plans, which range from 12GB to unlimited data. 

T-Mobile in the US offers unlimited voice minutes and texts alongside unlimited data on several of its plans. 

MTN is the first telecom company to launch a product of this type in South Africa, putting pressure on Vodacom, Telkom, and Cell C to follow suit.

A brave move

South Africa has a highly competitive mobile telecommunications market, with Telkom, Cell C, and Rain fighting for market share against Vodacom and MTN.

As the incumbents, it is tempting and natural for Vodacom and MTN to keep the status quo until the smaller networks disrupt them.

It is impressive that MTN pioneered free unlimited calls and was willing to disrupt its legacy products through its own innovation.

However, with any innovation comes risk. MTN still generates lots of money through voice calls, which it is willing to cut significantly with its SuperFlex products.

In its latest full financial year, MTN South Africa’s total service revenue grew by 3.6% to R40.85 billion, driven by data which contributed 45.6%. It increased from 41.8% in 2021.

This means that voice revenue, although declining 8.8% in the 2022 financial year, still contributes significantly to MTN South Africa’s service revenue.

However, MTN’s strategy to throw in voice revenue as an unlimited free add-on may come at the right time.

MTN South Africa’s data revenue has continued to show double-digit growth and is the operator’s fastest-growing revenue segment.

This may indicate why MTN is willing to forfeit some of its voice revenue, as it is declining anyway, to accelerate the growth of its data revenue. 

The R299 starting price for the service is also significantly higher than MTN South Africa’s blended average revenue per user (ARPU) of R98 per month.

If it can entice lower-ARPU clients to upgrade to its SuperFlex products and win market share from competitors, the product will be a winner.

It may also be a pre-emptive strike against Cell C, which is set to launch new products to grow its subscriber base.