Cell C CEO Alan Knott-Craig has vowed to go after the high-spending customers of rivals MTN and Vodacom and the smaller operator’s recent deal with Discovery Vitality and recent cuts in its international tariffs represent first steps in that plan.
“We absolutely have to attack the Vodacom and MTN base at the top, and I don’t use the word ‘attack’ lightly,” says Knott-Craig, who was speaking to TechCentral in an interview on Tuesday. “We cannot pussyfoot around this thing. We have to get to the high-spending customers.”
Cell C has about 500 000 post-paid customers — a segment that spends more on their cellular communication needs than prepaid users — and Knott-Craig has vowed to grow that number.
One of the reasons he says Cell C recently slashed the cost of international calls to 50 countries to 99c/minute was to attract more high-end customers. He says the strategy is paying off, with average revenue per user — a key industry metric — going up since the prices were cut.
Vodacom has responded, with its CEO, Shameel Joosub, last week saying it plans to cut international call prices to 89c/minute to 51 destinations, provided customers pay a monthly fee of R5. The operator had planned to introduce the new rates on 1 October, but delayed their launch because of “minor technical issues in the final round of testing”.
“I’m not surprised Shameel dropped the tariff,” Knott-Craig says. “It’s just a pity they didn’t check their billing system first.”
He adds that if Vodacom maintains the new tariff — “unlike the last one that just fizzled out” (a reference to Vodacom’s ill-fated Freedom 99 tariff) — then Cell C will undercut it. “It’s as simple as that.”
He also criticises Vodacom for charging its customers R5/month to benefit from the lower rates. “Why [force] opt-in? Opting in is like opting out. If you are serious, give it to everyone. Why pay R5? You’ve screwed [customers] long enough. Let them keep their R5.”
Last week, Discovery Vitality, the rewards programme owned by Discovery Holdings, said it had signed a deal with Cell C that will see the two companies launch VitalityMobile, allowing Vitality members to call one another for free if both use Cell C’s network. Costing R29/month, the service will be available to subscribers of Cell C’s Straight Up 100, 200, 400 and 800 contracts. Customers will also get an additional 50% of data on top of their normal data allocation.
Knott-Craig says Cell C will sign similar deals with other companies in an effort to attract more high-end customers from rival networks. “You can dream of a good margin, or you can forget about it … and make do with a lower margin and attack the higher-end space. You’re not going to get the higher base unless you give some margin away. We must be the highest-margin telco country in the world. Some analysts ask how, at 99c/minute, you can build a sustainable business. We could probably cut [tariffs] again and still be okay.” — (c) 2012 NewsCentral Media
