iPhone 6 is cheaper on contract

Telkom Mobile's iPhone 6 offering seems to offer the best value to contract consumers.

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Apple fans who have not taken advantage of the Core Group's R4 400 cash-back trade-in deal would be best served buying the new iPhone on contract.

Research done by ITWeb in conjunction with BMI-TechKnowledge (BMI-T) shows the best deals to be had are when end-users sign up for a 24-month deal with cellular providers, and by far the best offer is through Telkom Mobile, when its unlimited browsing on its own network is taken into account.

ITWeb and BMI-T collated each operators' offerings, based on iStore deals, and stripped out the value of voice and data use - after normalising the per MB and per minute costs based on prepaid packages - to determine the core cost of the iPhone 6. The results, on face value, show those who opt for a contract are getting a better deal, when the cashback voucher is taken out of the equation.

The iStore is offering the 16GB handset for R9 899, the 64GB device for R10 999 and the 128GB unit at a price of R12 599. It also offers financed deals through First National Bank (FNB), and contract options that mirror what the operators have also placed on the table.

Buying the new iPhone 6 on contract will cost anywhere between R499 and R899, depending on which package users select. However, when taking into account Telkom Mobile's offer of unlimited browsing on its own network - assuming the user only hits 5GB in downloads - the handset works out to be substantially cheaper than on any of the other networks.

If end-users buy the 16GB iPhone 6 via Telkom Mobile, they will claw back as much as R4 160, while as much as R12 000 over the 24-month contract period on the value of the handset and services can be saved on the 64GB and 128GB offerings. However, stripping out the unlimited browsing on Telkom Mobile's network - as this offer does not extend to when end-users roam on MTN's infrastructure, the savings to be had drop to between R2 500 and R2 700 when looking at the 64GB and 128GB units.

Assuming Telkom Mobile users only download 1GB of data a month, MTN and Cell C come out tops in terms of savings to be had when the value-adds are taken into account. MTN contract subscribers will save between R3 000 and R6 000, depending on the handset they choose.

Those who opt to go with the big red provider will save between just more than R1 000 and R3 200 over the 24-month period, while end-users who sign up with Cell C can save between R3 100 and R6 200 overall.

Buying the handset through FNB's option will cost consumers an additional R157 over the 24-month period for the 16GB device, but the per-month cost equalises to the iStore's cash price for the 64GB and 128GB handsets.

BMI-T director Brian Neilson explains the operators may be able to offer such deals because of the manufacturer discounts they get for bulk purchasing of the handsets, or else they would have to be giving network services away much more cheaply than the normalised values used in the calculations.

However, Neilson notes, this could be attributed to "breakage" as operators generally bank on the expectation that end-users either go out of bundle, and spend much more, which will allow them to recoup the subsidy, or not use up all the minutes and data, which would save the cellular companies on network utilisation.

Inferred subsidy:

* Assumes 1GB of data use on Telkom Mobile's network per month.

*Assumes 5GB of data use on Telkom Mobile's network per month.