A report by Tariffic has revealed that although some service providers offer subsidies on phones when signing up for a contract, there is no such things as a free phone, and in many cases it turns out cheaper to buy the phone for cash.
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 behaviour.