When it’s cheaper to buy a smartphone instead of taking out a contract

If you're on a cellphone contract, you may end up paying more over 24 months than if you'd simply bought the phone itself

Tariffic, a South African company founded in 2011 that helps businesses and individuals manage and minimise their cellphone costs, has released a report which sought to determine whether consumers can get a good deal on a new cellphone on contract.

The report, called Tariffic Tracker, is for the third quarter of 2017 and focuses on how much customers are actually paying for their cellular handset. It has been established that most South Africans buy a new contract based on the phone they’re looking for. But are networks offering a substantial subsidy on the phone or is it cheaper to buy the cellphone upfront?

Tariffic analysed three different subsets of cellphone packages for each of the four major mobile network operators – Vodacom, Cell C, MTN and Telkom – to ascertain how much consumers are paying for the service.

READ MORE: Cassper Nyovest thrilled to be launching his own cellphone

The handsets considered were the Galaxy A5 (32 GB), Galaxy S8 (64 GB) and iPhone 7 (32 GB). The amount customers end up paying over 24 months is calculated by comparing the “deal fee” (how much you pay every month for the contract plus the phone) against the SIM-only fee for the very same package.

And the results are surprising. According to the report, there are indeed cases where consumers get a great deal on a handset and receive a substantial subsidy from a network. However, in many cases, you actually pay more over 24 months for the phone than if you had bought it from Takealot, for example.

Tariffic’s report shows that the biggest subsidised deals (out of the three handsets analysed) are available on the iPhone 7, while MTN and Cell C generally offer the largest subsidies.

Cell C offered the best subsidy. It will subsidise an iPhone 7 by nearly R5 500 on a Pinnacle Unlimited package (so you pay only R8,400 over the course of your contract for a phone that retails for R13 810). Vodacom had the worst deal: you effectively pay R19 680 for a Samsung Galaxy S8 on their Smart L+ package, compared to the retail cash price of R13 045 from Takealot.

READ MORE: Sancu warns consumers of inflated out-of-bundle data costs

Tariffic CEO Antony Seeff says there’s no such thing as a free phone when it comes to cellphone contracts. “Sometimes you’ll pay less for your phone and receive a decent subsidy from the networks, but other times it’s better to get a SIM-only deal and buy your phone cash or finance it through your bank,” he explains.

“Sometimes these SIM-only deals come with additional minutes or data as well.” Seeff says that those who want a new contract should find one based on the phone they want as well as on their unique behaviour.

Tariffic’s data is based on packages that are publicly available in service providers’ broadsheets and on their websites. In some circumstances, the network operators’ call centres were called to verify certain deals.

Source: tariffic.com