How much data do South Africans living in slums use if you give them unlimited internet?

Among the poorest households in South Africa, up to 3 GB or 4 GB of data is used per day if they are given free unlimited internet access.

That was one of the notable comments made by Vumatel CEO Dietlof Mare during a recent Remgro presentation to its investors.

Remgro is a shareholder in Community Investment Ventures Holdings (CIVH), which owns Vumatel and DFA.

Mare announced that Vumatel would launch home fire services targeting 9.7 million households in the lowest income segment of South Africa with its new Vuma Key product.

The company has already launched Vuma Reach, targeting households earning between R5,000 and R30,000 per month.

Vuma Reach is a prepaid service with uncapped fiber packages that are cheaper than Vumatel’s main offer.

ISPs that resell Reach packages offer download speeds of 20 Mbps for between R375 and R400 with a prepayment of 28 days.

With Key, Vumatel aims to cater to those earning less than R5,000 per month.

The company said first planned to offer unlimited fiber for R89 ​​to approximately 10 million customers in 2017.

Although the project suffered some delays, it now appears to be on track for a commercial release in the future.

The fiber network operator launched a pilot in Alexandra Township to test the product.

Alexandra township with Sandton in the background

Mare said that some households used around 3 or 4 GB a day. That equates to between 90 GB and 120 GB per month.

He said there was a great opportunity to bring reliable Internet to this market and bridge the digital divide.

While the project is still in a pilot phase, Vumatel said it plans to begin expanding it soon.

Mare said one of the ways Vumatel can offer unlimited service at such a low cost is to wrangle it a “little bit.” Contention refers to clients sharing bandwidth on a link.

Another factor that made the low-income market attractive was higher recruitment and retention.

Mare said Vumatel saw over 30% uptake in Vuma Reach areas, better than rates in its core areas.

Even though the product did not bind people to a contract, Vumatel retained customers because they saw the service as a “utility” similar to having running water, Mare said.

dietlof mare
Dietlof Mare, CEO of Vumatel

Internet access is considered an essential economic enabler, helping to educate and inform people and providing them with job opportunities.

South African households with an income of less than R5,000 most often live in areas that do not have reliable fixed broadband.

Instead, they must use mobile data, which can be very expensive compared to fiber.

Their low and irregular income also makes them less likely to be approved for a long-term or month-to-month cellular contract that provides data at lower rates than prepaid.

MyBroadband compared the amount of mobile data people could get for the same R89 that Vuma Key is targeting using prepaid monthly data packages from the four major mobile network operators in South Africa.

We also compared how much it would cost to buy the 90 GB of data that some Vuma Key pilot customers were consuming per month.

Rain was excluded from the comparison because it does not offer prepaid packages.

Mobile data costs vs Vuma Key
Amount of prepaid monthly data customers get for R89 Cost of monthly prepaid packages with at least 90 GB of data
Vodacom 1GB:
1 pack of 1 GB for R85
$2,097:
3 packages of 30 GB for R699 each
MTN 1GB:
1 pack of 1 GB for R85
$1,967:
1 pack of 50 GB for R799 each
1 pack of 30 GB for R699 each
1 pack of 10 GB for R469 each
Telcom 1,035GB:
1 pack of 1 GB for R79
R5,382:
18 x 5 GB packets for R299
Cell C 2GB:
1 pack of 2 GB for R85
$1,447:
2 packages of 40 GB for R489 each
1 pack of 10 GB for R469 each

Now read: Vuma Core, Vuma Reach and Vuma Key: explanation of the three Vumatel services

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