Vodacom clamped down on the ‘content fraud’ that makes airtime disappear – and lost almost half the money it was making from content subscriptions
- South Africans have been complaining about mysteriously disappearing airtime and dodgy subscriptions they never signed up for.
- A short note in Vodacom's annual report published on Friday gives a rare glimpse into just how big the problem is – or hopefully was.
- In its last financial year its revenue from content subscriptions dropped by nearly half, Vodacom said, as it clamps down on what it calls "content fraud".
- For more stories, go to the Business Insider South Africa homepage.
We don't know how much money and airtime South Africans have lost to what Vodacom refers to as "content fraud": dodgy subscription services that make airtime disappear.
But on Friday we got a rare, official number associated with such fraud, which suggests that as recently as last year a very large number of cellphone content subscriptions were dodgy.
It also suggests that Vodacom, and presumably its fellow operators, were making a lot of money from its customers being ripped off.
See also: Vodacom quietly launched a mobile gaming platform – and would like you to pay R100 a month to play games you can get for free
In short notes in its integrated annual report published on Friday, Vodacom discloses that in its financial year to the end of March, the contribution of digital services to its overall service revenues declined slightly.
That is a big deal, because growing income from digital services is a core part of Vodacom's strategy.
Then Vodacom explains why it made less, rather than more, money from digital services. Revenue from digital services was down because it recorded a 41% decline in "subscription-based content services revenue", the company says.
And it attributes that decline to "our stringent policies to minimise content fraud".
The company does not provide detailed numbers for the various ways in which it makes money from its subscribers, so there is no rand value to put to that percentage. But the loss of nearly half its revenue from content subscriptions suggests that either a very large proportion of subscription services on the Vodacom network were tinged by fraud, or Vodacom applied its policies on fraud in a very enthusiastic fashion.
Legitimate content subscription services are typically delivered on a network like Vodacom's by wireless application service providers, which send content like daily jokes in return for an airtime deduction or cellphone contract debit – once a user has agreed to swap money for the content.
But in many cases consumers who tried to figure out why their airtime was disappearing found they had been subscribed to services they have never heard of.
In October MTN confirmed it was possible for brand-new MTN numbers to be subscribed to such debits without any user permission.
In its annual report Vodacom described such "content billing fraud" as "a key concern for customers".
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