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    Home » Duncan McLeod » Alan’s next chapter

    Alan’s next chapter

    By Duncan McLeod28 March 2012
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    Knott-Craig is talking only in vague terms about how he’s going to put Cell C onto a new growth path. In a number of interviews with the media he’s spoken about how the industry needs a big shake-up and about how the old cellular business model needs to be turned on its head.

    He’s saying Cell C could take 25% of the mobile market in just four years, from about 13% now. That sounds far too ambitious, but reading between the lines it is possible to deduce a little of what he has up his sleeve.

    First of all, it’s clear that the industry’s future is not about voice telecommunications. Within a few short years, voice is going to become just another service sitting on top of the operators’ broadband networks. The cost of voice calls is going to plummet and voice margins are going to evaporate.

    The future of mobile is about broadband and, more importantly, what value-added services operators can offer businesses and consumers on top of ever-speedier Internet connections. The real margins in the future may come from offering business technology services in the corporate market and building social networks and other social and media platforms that appeal to consumers — yes, that may mean playing in the same space as companies such as Facebook and Apple.

    In the corporate market Cell C is not much of a player at all. Here MTN and Vodacom continue to dominate, at least in mobile. But it’s in business services that we could see Knott-Craig making aggressive early moves. Cell C is stronger in the retail consumer market than in the business space, so I expect him to try to make a strong early play in the business area. His myriad connections in corporate SA will come in handy.

    Here, too, an alliance with Dimension Data and its Internet Solutions (IS) division — natural partners to Cell C — would make sense. Knott-Craig and Didata chairman Jeremy Ord are said to be close. And the two companies are working together to build a new national fibre-optic network through FibreCo, their three-way joint venture with Andile Ngcaba’s Convergence Partners. (Ngcaba is also chairman of Didata Africa.)

    I expect this collaboration to tighten. How it will unfold is unclear. IS seems an odd man out in the industry. It is the only big converged voice and data services provider not aligned closely to a local telecom operator. Either Didata parent, Japan’s NTT, will have to commit the billions of rand needed to build a network of scale (unlikely), or there’ll have to be some sort of corporate action in the next year or two. My bet is something interesting is going to unfold in the Didata/IS/Cell C/FibreCo interlinked web of companies.

    In the consumer space, expect Knott-Craig to move quickly to improve Cell C’s distribution channels. Cellular distribution and the retail channel is a space he knows well. This is probably giving his successor at Vodacom, his long-time colleague Pieter Uys, restless nights.

    Knott-Craig has also professed to be keen to build or at least leverage social networks and other consumer-facing services on top of Cell C’s broadband network. It’s interesting — I can’t think of a better word — that his son, Alan Jr, is CEO of the popular social chat service, MXit. Could something flow from these familial ties?

    Everyone I speak to at Cell C and its rivals wants to know what Knott-Craig has planned. That he’s going to try to leave another imprint on the industry is a given. How this next chapter will unfold is less clear.

    • Duncan McLeod is editor of TechCentral; this column is also published in Financial Mail
    • Photo by Dan Rosenthal
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    Alan Knott-Craig Andile Ngcaba Apple Cell C Convergence Partners Facebook FibreCo Internet Solutions Jeremy Ord MTN MXit Pieter Uys Vodacom
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