If Vodacom is going through its most difficult period yet, is it not time to cut its marketing budget when the Vodacom Bulls host the Vodacom Cheetahs at the Vodacom Loftus Stadium in the final of the Currie Cup?
"We will have to review that," says Vodacom Group CEO Pieter Uys. His group is already cutting costs - spending on marketing is down R14m to R751m for the half-year to end September.
Vodacom has gone into cost-cutting mode, but obsessing over overheads is something the high-flying local cellphone industry has never really prioritised. The global recession, a maturing domestic market and political pressure to cut call rates have changed this.
Pieter Uys - Already reducing costs
MTN too is feeling the heat. It is set to cut hundreds of permanent jobs and up to 3 000 temporary ones in a bid to bring down its cost base. Its local operation earnings were flat and its operating margins shrank from 32,1% to 31,3% for the half-year to end June.
SA's appetite for cellphones over the past 15 years has played a big part in driving MTN's and Vodacom's growth, but more cost-conscious consumers and legislation requiring them to prove their identities and places of residence have limited subscriber growth and depressed the companies' earnings.
The slowdown has hurt Vodacom in particular. Its results were knocked by a R3bn impairment relating to its acquisition of Gateway Communications but even if this write-down is excluded, earnings before interest and tax grew only 3,7% to R6,6bn.
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At the same time the takeover of Gateway played a big part in operating costs rising 16,8% to R6,4bn.
Uys says cost is a concern and the group has been working hard to get it under control. He adds that if its takeover of Gateway i s excluded, Vodacom's percentage rise in revenue is higher than its rise in cost.
Even fixed-line operator Telkom is not immune to the downturn. It said last week: "The SA business continued to experience margin pressure, absorbing higher-than-inflation increases in operating costs mainly as a result of higher payments to local and international operators, salary increases as a result of the agreement reached with the unions, higher depreciation and increased provisioning for inventory write-offs."
Telkom expects headline earnings per share to be 130%-140% lower for the six months to end-September.
The fall-off in growth is leading some operators to start looking not only at their costs, but at the very nature of their business models.
The closer examination of marketing budgets ties in with this.
Uys says the goal of Vodacom's marketing campaigns was to establish it as a consumer brand, but as the voice market has matured there has been less of a need to push the brand.
Vodacom is now moving into data/Internet but even this shift does not come without cost.
Uys says a mobile network needs to be fast, but a doubling of its speed will double its cost.
Looming electricity price increases are also set to push up overheads. The companies have already started putting in new equipment to better manage their electricity usage. Vodacom, for instance, is installing new hardware in its base stations that saves up to 40% on power consumption.
It's not only in SA that power is a concern. MTN operates in several African countries where, even when it is connected to the power grid, electricity supply is unreliable.
But even when the effects of the recession fade there will be no going back to business as usual, even in what are expected to be high-growth African markets, says Informa Telecoms analyst Nick Jotischky.
He points out that though mobile operators have already had great success in urban areas, the next growth phase is in rural regions.
This presents its own set of problems, including lower population density over a wider area, which pushes up the cost of servicing clients.
Jotischky says this is why a presentation by India's Bharti Airtel, which has been successful in isolated rural areas, was so closely watched at the recent Africa Com conference.
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