Econet’s Smart USD bundles are cheaper than MTN’s in South Africa. There’s much to discuss

Econet Wireless launched Smart USD bundles yesterday that allow customers to purchase voice airtime, data and SMS in USD. 

Customers can buy this USD airtime either through the EcoCash FCA wallet or by purchasing physical recharge cards or vouchers. Said Econet spokesperson,

Customers will be able to purchase the bundles via their EcoCash FCA wallet, by buying physical recharge cards from airtime vendors and selected merchants, or by purchasing recharge till slips (vouchers) from Econet shops, OK and TM Pick n Pay supermarkets countrywide

Fungayi Mandivey of Econet

The EcoCash FCA wallet option is not the most convenient because the only ways to load money into that account at the moment are either remittances or transfers from other FCA wallet users. You might have the cash with you but there is no way to put it into the EcoCash FCA wallet, no cash ins are allowed as per the RBZ’s directives. Ridiculous.

So, for most people it will have to be the physical recharge cards or till slips. This is not a major problem because the informal market where USD lives is mostly a cash economy. Most people have most of their USD savings and earnings in cash. 

What people lose out on is the convenience of being able to purchase a bundle at any time. If one’s WhatsApp bundle runs out after sending a risky text at 10:30pm, depending on where they live, they are not going to be able to purchase another Smart USD bundle. 

So, I hope the RBZ reconsiders EcoCash Cash ins, or at least just the USD cash ins.

[Update: Indeed the cash ins returned with a bang. EcoCash announced that customers can now cash in at Econet shops with more merchants accepting cash ins later on. Read more about that here: EcoCash FCA wallet cash-in RETURNS. Is the informal market going to jump on?]

How to buy the bundles

So you have your physical recharge card? First you just do the *121# dance like always. After that you dial *143#, select Option 1: Smart USD bundles and then choose what you want.

Weren’t we phasing out juice cards?

We are going to witness the resurgence of the physical recharge card which was in the process of being phased out. Econet has until 30 April to reduce sales of physical recharge cards to 10% of all airtime sold. If I were Econet I would phase out the Zimdollar ones leaving most of that 10% to USD cards.

Let’s remember though that the main reason the RBZ ordered the phasing out of physical juice cards was because of them being used as a currency trading tool.

The USD physical recharge cards won’t be facing similar problems because they already are in USD and cannot be used for arbitrage like the Zimdollar ones are. So, who knows, maybe the RBZ will change tune and allow more than 10% of sales in physical cards provided they are in USD. After all, if the telcos get their own USD, that eases the RBZ’s USD auction distribution problems.

The Smart USD bundles make sense

In a country that is ever dollarising, albeit slowly, this Smart USD bundle move makes all the sense in the world. 

Most Zimbabweans are outside the formal job market and thus also on the fringes of the formal financial economy. So, for those earning their living in USD on the informal market, being able to purchase their airtime in USD is a convenience. 

Whilst Econet gets to raise foreign currency for their various needs, especially for spares and new equipment purchases. There is also the benefit of not losing out to inflation as much when they earn that sweet USD. Meaning the USD bundles can and are priced competitively as a result.

We saw how NetOne tried to catch up with inflation by increasing their Zimdollar tariffs drastically and ended up drawing the ire of customers who forced them to revert back to old prices. Econet and Telecel saw the damage NetOne took and I’d bet they shelved their own price hikes. 

Instead by launching the USD bundles Econet kills multiple birds with one stone, they don’t have to add an ‘inflation premium’ on their prices meaning competitive prices. Then they will also reduce their dependence on the forex auction market where they aren’t getting enough USD anyway. 

That’s a big deal because when we give these telcos our Zimdollars and they can’t immediately convert all of it to USD, they start losing value. Hence why the exorbitant prices they have been charging. It’s all an attempt to hedge against the loss of value of their earnings whilst they sit in bank accounts waiting for the Reserve Bank of Zimbabwe to allocate them a little of the greenback.

Data prices somewhat reasonable again

When we compare the Zimdollar bundles to the Smart USD bundles we see that indeed the USD bundles are much cheaper. This is intended to entice you to give Econet your USD and not your Zimdollar and you would be unwise not to oblige them. 

Notice the subtle nudging from Econet, calling the USD ones smart. Which would make the other ones dumb if you follow the logic.

The best like for like bundle to compare is the 10GB bundle;

ZWL$4920 for 10GB (eLearning bundle), translates to around US$34 (or US$17 on the black market) whilst,

US$10 for 10GB is what the Smart USD bundle packs.

So, by going with the Smart Bundle you get a 41% discount. Or rather by going with the Zimdollar bundle you pay a 41% premium. $17 vs $10 is not up for debate, just go with the USD bundle.

The WhatsApp bundle cannot be compared like for like because there aren’t similar data sizes on the bundles. However, the Smart USD WhatsApp bundle gives you 300MB for a week for US$1 whilst the Zimdollar bundle gives you 140MB for ZWL$215. So, for ZWL$430 you get 280MB. That is worth around US$3 (or US$1.50) for less data.

Regional price comparison

At $10 for 10GB, Econet has priced their bundles competitively. In South Africa, both MTN and Vodacom will charge R469 (US$32) for a once off purchase of 10GB. 

That right there is ridiculous. MTN and Vodacom’s 10GB bundle is priced like Econet’s Zimdollar one using the RBZ’s auction rate. 

The Masiyiwa founded Mascom in Botswana charges P149 (US$13) for 8.5GB. So, less GB for more money, meaning the Econet bundle is cheaper.

Airtel in Zambia on the other hand is not messing about. 10GB costs ZMW100 ($US5.68). That is ridiculously cheap. Who wouldn’t want to pay US57c for a megabyte. Econet’s bundle is almost double that. 

This baffles the mind. South Africa with their huge coast has a number of subsea cables landing and yet for the last few years at least, Zambia, the landlocked country has had cheaper internet. Makes you wonder just how much being landlocked adds to internet costs. 

For years we have accepted that that’s the reason why Zim internet is expensive but what Zambia is doing makes us question our sanity.

Anyway

We love Econet’s new Smart USD bundles. Apart from the Zambians who have some magic going on, they are competitive. There has been a sustained cry about data prices in Zimbabwe with #DataMustFall constantly trending on social media. Does the USD bundle somewhat relieve the pressure?

What do you think? Also, do you still use the EcoCash FCA wallet to be able to conveniently purchase these bundles?  Let us know in the comments below.