CELL C has "clearly spotted the opportunity to differentiate itself strongly in one of the distinct categories of mobile services" by reducing its international voice call tariffs, says Arthur Goldstuck, MD of technology research provider World Wide Worx.
Cell C last week said it had cut outgoing call rates to a further 177 countries, after it had already slashed rates to 50 countries to 99c per minute.
Analysts have said the company needs to implement drastic moves to avoid stagnating in a saturated market.
Cell C has grouped countries into five zones, and tariffs to the additional 177 countries will range from R1.99 to R8.99 a minute.
Mr Goldstuck said the two major mobile network operators, MTN and Vodacom, were taking "great pains to avoid giving the impression they are responding to Cell C price cuts".
"However," he said, "over time we can expect to see them introduce their own versions of lower rates, particularly by offering variable rates for different kinds of calls — based on time of day, location and network load."
According to Mr Goldstuck, Cell C is signing on more customers every month than ever before. "It is only high churn rates that prevent them from growing their market share more rapidly."
He said Cell C’s move could also be an attempt to highlight the "absurd cost that interconnect fees build into local rates".
Alan Knott-Craig, CEO of Cell C, said the company had spent "a great deal of time" negotiating better termination rates with its international partners.
"The termination rates, or rates charged by other operators to carry calls on their networks, remain the highest input cost both locally and abroad when determining call rates," he said.
Cell C’s competitors have not yet retaliated with similar permanent cuts in international call prices. Ultimately, though, they will have to respond more aggressively.
Mr Knott-Craig said Cell C "will continue to negotiate better rates and where we are able to further reduce rates, we will make amendments".
Spiwe Chireka, a telecoms analyst at global company International Data Corporation, said: "It appears the market may not have been of significant interest to the service providers prior to this because there was never really any notable competition or focus (on) the international market.
"In 2010-11, 8.ta did make an offering for international calls at R2.50 per min, which was the cheapest on the market at the time, (but it) was not promoted enough and in the end fizzled.
"Now Cell C has clout and aggressive marketing to turn this new offering into something viable. So, we may start to see this generate interest. Its competition must respond."
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