TARIFFIC TRACKER - Q3 2017: “THERE'S NO SUCH THING AS A 'FREE PHONE'"

August 08, 2017

Most South Africans buy a new cellphone contract based on the phone they are looking for. But is this a good deal? Are the networks subsidising the phone substantially or is it cheaper for you to buy it yourself?

Tariffic, a South African company that helps businesses and individuals manage & minimise their cellphone bills, has just released its quarterly ‘’Tariffic Tracker’’ focusing on how much you are actually paying for your cellular handset.

Tariffic has analysed 3 different subsets of cellphone packages for each of the 4 major Mobile Network Operators to see how much consumers are paying for their handset on these packages. The handsets considered are the Galaxy A5 (32 GB), the Galaxy S8 (64 GB), and the iPhone 7 (32 GB). The effective amount that customers land up paying over 24 months is calculated by comparing the “deal fee” (how much you will pay every month for the contract plus the phone) against the SIM-only fee for the exact same package.

The results are astounding. There are cases where you get a great deal on a handset, and receive a substantial subsidy from your network. However, in many cases you will actually land up paying more over 24 months for the phone than if you would have just bought it retail from Takealot.

Tariffic’s results clearly show the biggest subsidised deals (out of the 3 handsets analysed) are available on the iPhone 7 while MTN and Cell C generally give the largest subsidies.

The best subsidy available came from Cell C who will subsidies an iPhone 7 by nearly R5 500 on a Pinnacle Unlimited package (so you will only pay R8,400 over the course of your contract for a phone that retails for R13 810). The worst deal is from Vodacom, where you will land up paying R19 680 for a Samsung Galaxy S8 on their Smart L+ package, compared to the retail cash price of R13 045 from Takealot.

Antony Seeff, Tariffic’s CEO, says, “There’s no such thing as a ‘free phone’ when it comes to cellphone contracts”. He continues, “sometimes you’ll pay less for your phone and receive a decent subsidy from the networks, but other times it will be better to get a SIM-only deal and buy your phone cash or finance it through your bank”.

“Sometimes these SIM-only deals come with additional minutes or data as well”, says Seeff. The Tariffic CEO recommends that people who are looking for a new contract should find the best contract for them, based on the phone they want but also based on their unique behavior.

THE TRACKER FINDINGS

NOTES ON THE CALCULATIONS

  • Tariffic analyses is based on packages that are publicly available in service providers’ broadsheets and websites. In certain circumstances, the network operators’ call centres were called to verify certain deals.
  • The subsidy from the network is calculated by subtracting the difference between the ‘deal fee’ and the SIM-only fee, for each contract, multiplied by 24 months, from the cash price of the hardware (available from Takealot.com). Note that no other additional value was considered (for example, some packages come with additional minutes & megabytes if you’re getting a SIM-only deal; others come with educational vouchers if you get packaged deals; etc).
  • All tariff information is valid as of end of July 2017.

ABOUT TARIFFIC

Tariffic was founded in 2011 to help consumers and businesses save money on their cellphone bills. Tariffic’s mission is to help cellphone users understand, optimise, and manage their cellphone spend and cellular usage.

Tariffic’s award-winning software has been recognised as a unique innovation, on an international scale. In 2012 Tariffic was awarded a Support Program for Industrial Innovation (SPII) grant for global innovation by the Department of Trade & Industry deeming components of its software a world first. In 2013 Tariffic was invited to the Enterprise Technology Show to present and discuss its global innovation, and in 2014 Tariffic was a finalist in Microsoft’s Start Up Tel-Aviv competition and a guest at the Industrial Development Corporation of South Africa’s prestigious Innovation Summit, to name a few accolades. In 2016, Tariffic received Frost & Sullivan’s 2016 New Product Innovation Award in the Value-Added services industry in South Africa. Tariffic is also a graduate of Microsoft’s BizSpark and BizSpark+ programmes.

Tariffic is partly owned by Saicom Holdings. The Saicom group of companies are leaders in business telecommunication, largely focusing on telephony systems for corporate clients, VoIP operators, and international Telco carriers. Through its subsidiaries, including Saicom Voice Services and Saicom Technology, Saicom have rolled out telecommunications solutions to government departments, municipalities, financial institutions, and some of the largest call centres and corporations around South Africa and the African continent.

Note that Tariffic is not a research company. Tariffic is a company that helps businesses manage & minimise their cellular spend. Tariffic uses the data it collects, as part of its normal course of business, to provide South Africans with insight into the local cellular market.

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