Another low-cost handset hits SA

By Damaria Senne, ITWeb senior journalist

Johannesburg, 28 May 2007

Vodacom will introduce "ultra-low-cost handsets" in SA next month, hoping this will drive mobile penetration levels and significantly contribute to the creation of an information society.

The V125 and V225 phones are part of Vodafone's new initiative to provide low-cost handsets to emerging markets.

However, market observers argue the initiative is nothing new and will have little impact on lowering the cost of connectivity. The initiative will also not have a significant impact on the second-hand phone market, they say.

The V125 retails at R229, while the V225 sells at R369. The retail price includes VAT and a Super 6 starter pack.

"We believe this will give our customers good quality, attractive cellphones, with popular features and functionality, at a reasonable price," says Shameel Joosub, MD of Vodacom SA, a 50% subsidiary of Vodafone.

Nothing new

BMI-TechKnowledge senior analyst Richard Hurst says it makes perfect sense for Vodacom to enter the ultra-low-cost handset market, as there is a pent-up demand for basic voice services in the low end of the market.

However, World Wide Worx MD Arthur Goldstuck disagrees with Vodacom on how that demand should be addressed.

He says the issue that hinders connectivity for the poor is the high call cost, not the cost of the handset itself. "We need lower call charges, not lower cost handsets."

Communications Users Association of SA spokesman Ray Webber and Goldstuck also note the provision of ultra-low-cost handsets is not new to the South African communications market, even from Vodacom itself.

Another example is the Motorola C113 handset, which costs R215, including a starter pack, and is available from Vodacom shops, Goldstuck says.

"Vodacom's new offering does not sound different to what is already on the market," says Webber.