Vodafone is phasing out its unlimited data plans

On Thursday, a tech blogger noticed that Vodafone Uganda had removed unlimited packages from the data plans listed on its website. Vodafone responded, on Twitter, that its unlimited packages are no more.

We reached out to Vodafone Uganda’s Communications Manager, Rukh-Shana Namuyimba, who told us they are “in the process of phasing out unlimited plans,” which are still available for some customers. “Vodafone customers who had already signed up by 25th August 2016 will continue to use unlimited plans until further notice,” Namuyimba said in emailed remarks. “We will certainly advise them in time if the product is to be entirely discontinued. But for now they can continue to purchase unlimited data through our different channels.”

All eight unlimited plans offered by the telecom will be affected by the change, Namuyimba said.

Of the five telecoms providing unlimited data plans, Vodafone’s were probably the most varied in both pricing and data volume. The telecom launched the plans in February 2015 when it it started operations, a strategy definitely aimed at grabbing market share.

Other telecoms were forced to slash data prices, add unlimited data plans or vary their offerings to compete. MTN reduced its data rates in June 2015. Africell Uganda brought down its data prices and added three unlimited plans in addition to its monthly plan in October 2015. In December, Smile Uganda also announced that it was adding a 2mbps unlimited monthly plan. It added weekly and daily unlimited plans this year, and a faster (6mbps) uncapped plan in June.  Smile has since discontinued the daily and weekly plans, “a decision made by our marketing team based on customer feedback,” a customer care representative told Uganda Business News.

Namuyimba said Vodafone is reviewing the plans to provide a better experience to its customers. According to its fair usage policy, internet speeds of customers on unlimited plans are curtailed when they reach a certain limit. This played a big role in the network’s decision to stop the plans, according to Namuyimba.

“The nature of 4G unlimited data plans is that data speeds have to be throttled once the user reaches the data cap and under Vodafone’s Fair Use Policy speeds are throttled to 128kbps. This can be somewhat frustrating for customers as it does not give a good experience. In an ideal world we would have throttled the speeds to 2mbps or even 6mbps so that customers have a truly amazing experience but that requires resources. So rather than compromise on the experience, we have decided to review the product for now.”

Vodafone does not publish its subscriber numbers, but it has managed to position itself as the preferred provider of fast but affordable internet for individual users and small and medium-sized enterprises. The telecom added 100,000 subscribers in its first eight months using long term evolution (LTE) data services – commonly known as 4G – as its unique selling point. The majority of its subscribers are in Kampala and Entebbe, the only places covered by its 4G network.

The decision could mean that Vodafone is now confident about its footing in Uganda’s very competitive telecom industry, and no longer needs what was a core part of its entry strategy. Following that line of argument, it is looking at the extra revenue it will earn from data services after eliminating its cheaper unlimited bundles – on the regular monthly plans, 20GB of data costs more than what 50GB cost on the unlimited plans. Or, like its spokesperson suggests, the plans were expensive for the telecom to maintain.

Vodafone has told Twitter users asking about the changes that current users will not be affected by the changes. Namuyimba told us the same thing, but attached a caveat: “until further notice.” It seems a matter of time before the company does away with all unlimited data plans.

“There will be equally attractive bundles to replace the unlimited ones and these will be communicated very soon,” Namuyimba said when we asked if new plans will be rolled out to replace the unlimited data bundles.

It’s hard to tell how Vodafone’s customers use its products since it does not publish its numbers. But half-year results of the country’s largest telecom and biggest tax payer, MTN Uganda, showed a 22.7% increase in data revenue, which contributed 32.8% to total revenue. Most of the revenue earned from data, however, was from local content services, not internet.

Vodafone itself acknowledged the importance of data revenues to telecom bottom lines in its announcement of a new Chief Executive Officer, John Ndego, in July. “His appointment is coming one year into the entry of Vodafone in Uganda and at a crucial time in the telecommunications industry in Uganda, with data services poised to dictate the pace of growth in the years ahead,” the statement said.

“The company is well placed to take advantage of the opportunities and to benefit more broadly from Ndego’s considerable commercial and strategic experience.”

At the moment, its 4G-LTE network is available only in Kampala and Entebbe, while the rest of the country has a 2G/3G voice service. In June it carried out improvements to its network in Kampala, extending the reach of its 4G service in Bukasa, Kyambogo, lower Kololo near Lugogo bypass, Naguru and Mbuya.

Mobile internet subscribers were 7.46 million in the first quarter of 2016 versus 5.90 million in the first quarter of 2015, according to the Uganda Communications Commission.