February 05, 2015
50c a minute on Cell C! 79c on MTN! Prepaid rates seem to get lower by the month! With this newfound sense of competition in the prepaid space and increasingly low rates, I’m sure you’ve asked the question, “Is it worthwhile to move from a postpaid contract to prepaid?”
We get asked this question quite a lot these days, and so we thought we'd tally up all the pro’s and con’s of each solution to help you decide what’s best for you.
Now this is what I call competition
The networks, led by Cell C, have been at each others’ throats regarding prepaid calls rates with rates now as low as 50c a minute. If you’re just comparing call rates between prepaid and postpaid – there’s no doubt that you’ll be getting more bang for your buck on prepaid.
I laugh in the face of bill shock!
The other benefit of the prepaid system is that you know exactly how much you will pay for your phone on a monthly basis. This definitely helps from a budgeting perspective and means that you’ll be leaving the bill shock and nasty bill surprises to your friends on postpaid.
Bad signal with Network X? Network Y come out with cheaper rates? No problem – on prepaid you can just buy a new SIM card, pop it in your phone, and you’re good to go. There are no lock-ins or contract terms. And you can now take your current number with you with the ability to port from postpaid to prepaid or amongst networks on prepaid.
You rate you’re getting a deal?
Now it may be true that rates are currently lower on prepaid than they are on postpaid, but you must remember that on most tariff plans, you only pay these kind of rates for your usage after you use all your included minutes, data, etc. and go ‘out-of-bundle’. This out-of-bundle spend is where many people are blind-sided by costs and end up paying a whole lot more than they bargained for. So if you’re on the right package and have the right bundles for your usage, you can reduce your cellphone bill by quite a bit already.
Modern cellphones are really awesome. They let you call your friends, get directions, chat on WhatsApp, and do a million other things on a million different apps (seriously there’s an app for just about everything these days). But… do you know how frustrating it is to not be able to use any of your phone’s functionality because you’ve run out of airtime? It’s just not cool.
The bottom line is that postpaid doesn’t run out and that means you’re always connected. Prepaid on the other hand needs to be recharged when you use up all of your airtime. It’s definitely much easier to recharge on prepaid these days – what with all the banking apps that let you recharge and the fact that you can buy airtime almost everywhere – but you can still find yourself out of airtime when its most inconvenient.
Roam where you will
When it comes to roaming and using your South African number overseas, you need to be aware that while anyone on postpaid can easily activate roaming, the same does apply to prepaid. None of the networks offer data roaming on prepaid while overseas, and only Vodacom and MTN allow you to make calls. This is a deal-breaker for many people looking to move to prepaid.
Phones for everyone!
The networks are always pitching that ‘free’ phone that we can get when we renew our contracts. Isn’t that nice of them? As most of us know, the truth is that nothing’s for nothing. BUT even though you land up paying for most of the value of your phone over the term of the contract, it’s usually heavily subsidised by your network, which means you’re still getting a deal. We’ll unpack exactly how this works in a later blog post.
Comparing apples with a fruit salad
Now, you just really can’t compare the rates between the two options: With prepaid you pay R1 and you get R1 of airtime, but with postpaid you pay a monthly subscription and get a whole mix of value bolted on. This often includes airtime, data, SMSs, and a phone.
As an example, with Cell C you can make calls for 50c / minute on prepaid. But you can pay R200 a month for a Straight Up 200 postpaid contract and this doesn’t just give you 200 minutes, but also includes 200 MB data and 200 SMSs. So when you compare postpaid to prepaid, you’re not comparing apples with apples – the one is just based on minutes while the other is inclusive of all other value.
Choosing prepaid over postpaid definitely isn’t a one-size-fits-all decision, and will all come down to your lifestyle. My view is that if you’re looking to get a new phone or are a big traveler, it’s probably best to stick with your postpaid contract. If on the other hand, you’re cost conscience and are looking for the best rates with the most flexibility, it may be time to head to your local grocery store, by a prepaid SIM, and try it out.