MTN Rwanda announced that MTN Ihereze, the company’s prepaid credit service that gives customers advance airtime when their balance runs low, has been upgraded to include data borrowing. Customers dial a short code when their bundles deplete and can pay back the data on their next airtime recharge. The Ihereze service attracts a 15 percent charge on borrowed airtime, but a promotional offer of 7.5 percent will be applied on borrowed data until 30 June. 

Customers can borrow up to nine advances, subject to the subscriber’s eligibility. Once the oldest loan has been repaid, they are open to borrow again. 

Tarifica’s Take

This data borrowing concept is certainly innovative and may constitute a solution for cash-strapped mobile users in Rwanda’s prepaid market, but it also contains a feature that may alienate users.

Advancing airtime for voice services makes sense in that voice is traditionally the most basic service, and therefore the expectation is that it is the service that impecunious prepaid users would most want to safeguard in the event of depleting their allowances. The idea of extending this to data reflects the fact that data is now a critical plan feature even for those budget-oriented lower-end users who might want to borrow against future payment periods.

While users may not have a problem borrowing data now with the understanding that they will have a smaller allowance in the next recharge, they may well balk at the notion of paying interest on this data loan. A 15 percent rate might be seen as too onerous, and even the 7.5 percent promotional rate could come across as rather unkind. MTN could be undermining consumer loyalty and tarnishing its image to some extent by charging its prepaid customers interest on data. Time, of course, will tell.