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Vodacom to raise customer contract prices

Including an increase of as much as 10% on one of its mobile-broadband packages.

Vodacom Group , South Africa’s largest wireless operator by subscribers, will raise the price of most subscription contracts from May as it seeks to revive sales hit by regulatory cuts and rising power costs.

The unit of Newbury, England-based Vodafone Group Plc will raise the cost of five contract-price plans, including an increase of as much as 10 percent on one of its mobile-broadband packages, Johannesburg-based Vodacom said in a statement on Thursday. Sales in South Africa declined 3.1% to R16 billion ($1.3 billion) in the three months through December.

A forced reduction in fees for use of its network has “had a major impact” on sales, while costs have increased due to electricity supply issues, spokesman Richard Boorman said in an e-mailed statement. “We have had to review our tariff structures in tandem with implementing cost reduction programs within the company.”

Vodacom has been investing in spare fuel as the continent’s most industrialised nation struggles with power shortages. The communications regulator also halved the fees Vodacom can charge competitors for using its network, a move designed to help smaller operators in a market led by the company and MTN. Vodacom shares fell as much as 2.7% and traded 2.3 % lower at R130.76 as of 12:38 pm in Johannesburg, paring the year’s gain to 1.7%.

“Our expectation is that the average effective price per unit of both voice and data will continue to come down, making services more accessible,” Boorman said. “As individual customers consume more voice and data their overall spend will either be flat or increase.”

The wireless carrier is trying to reduce costs and is exploring the possibility of sharing infrastructure on the continent with competitors Millicom International Cellular SA and Bharti Airtel, a person familiar with the matter said earlier this month.

©2015 Bloomberg News

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