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Rain Mobile Unveils SIM-only Data Plans

Rain Mobile launched commercial operations on 6 June 2018, after completing its Beta Programme (internal network trial).  They unveiled their initial data-centric offering, with the aim to compete aggressively against the existing four mobile operators.  At a launch price of R50 per GB, Rain Mobile is substantially cheaper than any competing offers from mobile operators.

Their new prepaid data offering will generate the most interest in the medium-to-high LSM segments due to:

  • High set-up costs (SIM card plus delivery),
  • Its predominant presence in urban areas,
  • Its digital platform, (the only mechanism adopted to reach clients)
  • Process payment, and
  • Device acquisition costs.

Overall, the pricing strategy espoused by Rain Mobile will most likely lead to greater downward pricing pressure, and we can expect to see further data price declines this year.

Coverage Areas

Over the past 12 months, Rain Mobile has extended its co-location to 2100 Vodacom towers in several metros across the country.

It is estimated that the operator has achieved just over 30% LTE network population coverage, as its aggressive network expansion drive continues.

It is already covering 50 major cities and townships, as listed below:

rain-mobile-coverage

Value Proposition & Pricing Strategy

Rain Mobile does not offer contract plans and there are no out-of-bundle rates.

It only offers one package and the usage rate will differ from month-to-month, depending on the amount of data consumed. Customers pay a flat rate of R50/GB and can consume anything from 1GB to 26GB.

Users can add off-peak data for R250 a month to receive 19 hours daily of unlimited data from 11pm to 6pm the following evening.  Data used during ‘peak hours’, 6pm to 11pm, will continue to be charged at R50/GB. This time band shows that Rain Mobile targets the consumer market, as it offers unlimited data consumption during the traditional peak hours.

Rain Mobile claims that even though the unlimited packages add-on is completely uncapped, it will not hesitate to take the necessary steps to protect its customers from irresponsible, abusive or illegal activities, including disconnection of service.

As part of this operator’s initial offering, users that buy a SIM and/or device from them.  They will receive free unlimited mobile data to use and enjoy for a number of days as indicated below:

  • SIM only – 15 unlimited data days (R120 once-off)
  • Huawei 5573 (MiFi Router) – 30 unlimited days (R840 once-off)
  • Huawei E588 (MiFi Router) – 45 unlimited days (R1 540 once-off)
  • Huawei Y7 (Smartphone) – 60 unlimited days (R3 000 once-off)
  • Huawei P20 Lite (Smartphone) – 90 unlimited days (R4 600 once-off)

Impact on the Market?

Rain Mobile’s prepaid data offering is very competitive on a price/MB basis, compared to prepaid data plans offered by Cell C, MTN, and Vodacom.

However, the operator will most likely generate the most interest in the medium to high LSM segments.

Notably, users that are consuming less than 20GB of data per month, stand to gain the most from the R0.05/MB pricing announced by Rain considering that Cell C, MTN and Vodacom offer their 1GB data only plans at a price of R0.15/MB (three times more expensive).

Telkom is the only operator that can currently match this pricing.  They offer night time data usage, which significantly reduces the total price/MB.

No Competing Offer in the Market

This is due to its unique ability to offer any data user spending R250/month and more, value unlikely to be matched by competitors (19 hours of unlimited data from 11pm through to 6pm the following evening).  If larger operators fail to match this unlimited data add-on facility, this plan will be a major drawcard for Rain Mobile.

Vodacom revealed recently that in terms of average data usage, the average MB per smart device is 784MB and the average MB per smartphone is 681MB. These data consumption patterns suggest that key data users fall within Rain Mobile’s target market. Data users will most likely derive more value, and save costs, by switching to the Rain Mobile network.

Cell C and MTN both offer significantly higher priced prepaid data bundles in comparison with Rain Mobile.

Although Telkom’s churn rate may not be affected by Rain Mobile’s new data-centric plans and more desirable SIM-Only value proposition, they may experience a sluggish growth rate in the short to medium term, as Rain Mobile begins to make headway.

However, Rain Mobile’s new data-centric plans will not significantly affect the postpaid data market, due to the following:

  • It does not offer contact plans; a scenario that allows MNOs to retain their market positions in this space, and
  • The overall value embedded in the postpaid plans offered by MNOs in the form of handset subsidies, competitive in-bundle rates, free voice minutes, SMSs, data, and other VAS’s, suggest postpaid customers may have compelling reasons to be reluctant to switch to Rain Mobile.

Prepaid Data Market

When comparing other mobile operators 30-day prepaid data bundled offers to Rain Mobile’s new value proposition, it shows the following:

  • Rain Mobile’s standard prepaid price of R50/GB is very competitive compared to the price of prepaid data bundles (below 20GB) that are currently sold by mobile operators.
  • Only Telkom is able to match Rain Mobile’s aggressive prepaid pricing (on a cost/MB basis). This is due to extra night data allocated on its prepaid data bundles (1GB packages and above).

rain-prepaid-bundles

Postpaid Data Market

When comparing the 24-month SIM-only contract data plans currently in the market to Rain Mobile’s new offering, the latter is notably more expensive.

This suggests Rain Mobile is aiming to disrupt the prepaid mobile data market for now.  With an average price of R0.01/MB, MTN currently offers the most affordable contract data plans.

postpaid-data-market

Market Average Prices (Rain Mobile vs. Mobile Operators)

rain-market-avge-prices

Rain Mobile vs. Mobile Operators (Uncapped Market)

Rain Mobile is currently the only operator that is offering a handset-based uncapped data plan, while Telkom and Liquid Telecom only offer router-based uncapped packages.

At a price of R250/month, Rain Mobile’s add-on unlimited package is notably the most affordable uncapped mobile broadband offering in the market.

The table below shows the uncapped LTE plans currently offered in the market.

rain-uncapped-lte-plans

Conclusions

Overall, Rain Mobile’s R50/GB prepaid offering is very competitive (on price/MB basis) compared to prepaid data plans offering 20GB of data and below sold by Cell C, MTN and Vodacom.

Telkom is the only operator that is currently matching this pricing, as it offers night time data usage, which significantly reduces the total price/MB.

Rain Mobile’s new prepaid proposition is not expected to affect the postpaid data market considering the overall value offered by MNOs in this market.