[By Duncan McLeod]
Wondering what all the Heita branding is about? It’s all pointing to a teaser campaign by Telkom ahead of the launch of its mobile network next week. But can the fixed-line operator really take on the cellphone incumbents at their own game?
The “Heita!” campaign is everywhere one looks — on billboards, on television, on the Internet. Though its name isn’t mentioned in the campaign, my sources insist Telkom is the company behind it.
Heita is township slang meaning “howzit” or “hello”, a clever name (or slogan) for a telecommunications operator. And it’s in line with the “ayoba”, “yebo” and “woza” words favoured in rivals’ marketing campaigns.
What’s not yet absolutely clear is whether Heita is the name of the new business, or whether it’s the slogan for the marketing campaign. We’ll know soon enough.
Whatever the case, Telkom plans to make a big splash in SA’s mobile industry when it launches — and the smart money says that will happen next Thursday at an event the company is hosting at Lanseria airport.
The question now is whether Telkom can win over consumers in a mobile market where Sim card penetration is estimated at more than 120% and where as many as eight in 10 people have a cellphone.
What we know already is this: Telkom is investing R6bn over five years in its mobile network; it will target both prepaid and business customers; and it has signed a comprehensive roaming agreement to use MTN’s network in areas where it doesn’t yet have its own coverage.
What’s not known is how Telkom will price its products, and where exactly it sees the market opportunities.
But it is possible to make informed guesses. My colleague Candice Jones recently spoke to David Lerche, telecom analyst at Avior Research. Lerche thinks Telkom is going to start by targeting rural areas, where he believes Vodacom, MTN and Cell C are not as entrenched. Telkom, he says, will focus on contract customers only later. The rural market, he says, is more price-sensitive, and therefore more likely to churn to a new entrant.
But such customers also have little loyalty, often switching the Sim cards in their phones, looking for the cheapest deals for the time of the day or week. It’s hard to see how Telkom can engender any degree of loyalty.
So, the company is hoping to skew the tariff landscape in its favour, wanting other operators to pay it more to carry calls onto its new network than it pays them for calls going the other way.
Known as “asymmetric interconnection”, this demand has already led to a stand-off with other operators, with the Independent Communications Authority of SA asked to intervene in a dispute with MTN.
Lerche says asymmetric interconnection agreements will benefit Telkom, especially if it targets rural areas, where users are more likely to receive calls than make them.
But it’s in the corporate market where Telkom’s real strength lies. It will have to be careful of engaging in anticompetitive behaviour that could land it in trouble with the competition authorities, but it’s fair to assume the company will offer corporate customers inducements to buy all their services from it. It will cross-sell products where it can, offering big discounts to keep rivals at bay.
It’s the right strategy for Telkom, especially given that its mobile rivals are building fibre networks and offering new services, including fixed-line products, in an effort to get corporate customers to switch away from the traditionally fixed-line operator.
MTN, Vodacom and Cell C are coming for Telkom’s lunch. It is only fair Telkom goes after theirs, too.