Saturday, 1 February 2014

PRICED ABOVE FACE VALUE: MTN AND ITS RECHARGE CARD VENDORS

Within the Christmas holidays, there was a sudden hike in the prices of recharge card vouchers across all telecommunication networks, and one wondered what was the cause of the price jerk. It was surprising to learn from a vendor in a remote part of the country that the season and period was responsible for the increase in the prices above the face values of the recharge cards.

Now that the Christmas season has come and gone, why are the prices, especially that of MTN recharge cards/vouchers, still unchanged? We expected that the initial hike should go with the season, but in many parts of the country, the prices are still above their face values of N100, N200, N400, N750 and N1,500 (now N110, N220, N430, N780 and N1,550).

What are really the causes of these differences in retail pricing? The vendors in defense of their decision  to sell at rates above the face values of the vouchers blamed MTN recharge card dealers for selling to them above the prices they were buying before, and that there has been a decrease in the supply of the vouchers. MTN, in response to the issue has exonerated itself from being responsible for the hike of their credit voucher rates above their face values.

Who do you think should be blamed? MTN, of course.

MTN should find out and learn from Coca-Cola's experience in 2011 when the latter was confronted by a sharp fall in the demand and sales of its 35cl bottled products due to hike in the prices of the products above their official retail face values. Much was expended on campaigns by Coca-Cola bottling company to ensure that its customers and consumers were aware of the supposed retail prices and to insist on paying them. I do not think much was achieved by Coca-Cola throughout the campaign and the products still sell far above their official retail values.

It is obvious that Coca-Cola has lost a good share of its market to other soft drink products in the country since 2011 due to this problem. And it is possible that Coca-Cola is no longer the price leader in the soft drink industry in Nigeria any more. Same may become of MTN Telecommunications in Nigeria, if it fails to hurt the situation now.

How I wish I could suggest a way out of this problem. A plan to sell credit vouchers directly to MTN subscribers via ATM may not solve the problem since over 70% percent of its subscribers are still outside the banking system. And if it (MTN) may decide to set up official kiosks across the country in order to sell directly to customers, it may not still solve the problem. May be it should reduce the official rate of each voucher to allow dealers/distributors and retailers some encouraging profit margin. This, I think, may be the perfect solution to this problem. Or what do you think?

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