Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      Trump tariffs could wreck South Africa’s vehicle manufacturing industry

      14 July 2025

      Legislative overhaul on the cards for South Africa’s ICT sector

      14 July 2025

      The 1940s visionary who imagined the Information Age

      14 July 2025

      Microsoft South Africa to get new MD as Lillian Barnard moves to regional role

      14 July 2025

      Zuckerberg used open source to scale AI – now the lock-in begins

      14 July 2025
    • World

      Grok 4 arrives with bold claims and fresh controversy

      10 July 2025

      Bitcoin pushes higher into record territory

      10 July 2025

      Cupertino vs Brussels: Apple challenges Big Tech crackdown

      7 July 2025

      Grammarly acquires e-mail start-up Superhuman

      1 July 2025

      Apple considers ditching its own AI in Siri overhaul

      1 July 2025
    • In-depth

      Siemens is battling Big Tech for AI supremacy in factories

      24 June 2025

      The algorithm will sing now: why musicians should be worried about AI

      20 June 2025

      Meta bets $72-billion on AI – and investors love it

      17 June 2025

      MultiChoice may unbundle SuperSport from DStv

      12 June 2025

      Grok promised bias-free chat. Then came the edits

      2 June 2025
    • TCS

      TCS+ | MVNX on the opportunities in South Africa’s booming MVNO market

      11 July 2025

      TCS | Connecting Saffas – Renier Lombard on The Lekker Network

      7 July 2025

      TechCentral Nexus S0E4: Takealot’s big Post Office jobs plan

      4 July 2025

      TCS | Tech, townships and tenacity: Spar’s plan to win with Spar2U

      3 July 2025

      TCS+ | First Distribution on the latest and greatest cloud technologies

      27 June 2025
    • Opinion

      In defence of equity alternatives for BEE

      30 June 2025

      E-commerce in ICT distribution: enabler or disruptor?

      30 June 2025

      South Africa pioneered drone laws a decade ago – now it must catch up

      17 June 2025

      AI and the future of ICT distribution

      16 June 2025

      Singapore soared – why can’t we? Lessons South Africa refuses to learn

      13 June 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CambriLearn
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » In-depth » How Telkom Mobile will take fight to rivals

    How Telkom Mobile will take fight to rivals

    By Editor1 October 2010
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp

    After years in planning, Telkom is expected finally to unveil its mobile network in a fortnight. However, analysts say the company will have to pull out all the stops to gain any traction in the cellular market.

    David Lerche, telecommunications equity analyst at Avior Research, says Telkom may be on the right track as it is expected to begin by targeting the rural areas where the incumbent operators are not as entrenched.

    According to Lerche, Telkom will first tackle the rural prepaid market and only focus on contract customers later.

    “The prepaid market is considered more elastic, and is easier to churn,” he says. However, Telkom will need a solid distribution system in place to make this work.

    Vodacom, MTN and Cell C have had more than 10 years to build a significant distribution presence, and Telkom will have to match or even better that, Lerche says.

    “Pep Stores is the largest distributor of airtime in the country and the operators incentivise companies like that to sell more. Telkom will have to break into that model.”

    Lerche says that although the entrenched mobile players already have vast formalised distribution partners in the more built-up areas, they have not really formalised the rural market to the same extent.

    He says if Telkom tackles that market first, it could gain some of the traction it needs to make the business a success. “This is possibly why they are pushing for an asymmetrical interconnect fee,” he says.

    MTN and Telkom will face off on Saturday at the Independent Communications Authority of SA over a dispute over interconnect fees — what the operators charge each other to carry calls between their networks. Telkom wants to charge 93c/minute to carry rivals’ calls on its new mobile network, arguing that any less would be “unsustainable”.

    “Rural users are more likely to receive calls than make them, which would mean Telkom could get more income from targeting those users,” says Lerche.

    He says Telkom has ambitious plans for the mobile business and it hopes the mobile operation will break even financially in three or four years.

    Telkom is expected to do well in the corporate market, where it is already strong with fixed-line and data services. Here, it will be able to cross-sell solutions and offer discounts to big business customers.

    However, to gain traction in the consumer market, Telkom will need to come in at a particularly attractive price, says Lerche. “It can’t be 2% or 3% lower than the competitors, it has to make it worth the consumer’s while.”

    Denis Smit ... Telkom simply needs a mobile business

    He says Telkom will most likely drop prices by between 10% and 15% compared to the competition. “It is also likely it will drop prices one or two times more after that,” he says.

    Telkom has been working on a mobile business since it disposed of its shares in SA’s largest mobile business, Vodacom, last year.

    It has been playing its cards close to its chest regarding its plans, mainly because it is not keen to let its competitors know how it plans to go to market.

    However, in recent months some details have been revealed. In the first few months of life, Telkom will roam on MTN’s network to fill in gaps in its coverage.

    However, Lerche says Telkom wants to have most of the urban traffic migrated away from MTN’s network and onto its own infrastructure before the end of the year.

    The company has a lot riding on the success of its mobile plans – along with its Nigerian operation Multi-Links, the two businesses are meant to fill the revenue gap the sale of Vodacom left behind.

    Independent telecommunications analyst Richard Hurst says Telkom’s inability to turn around the deeply troubled Multi-Links has left investor confidence at an all-time low.

    The company’s decision to get into — and then out of — the broadcasting industry with its investment in Telkom Media has not make investors any less jittery.

    “Everyone is wary of Telkom’s business strategy. If there is even a hint of failure in its mobile plans, confidence will plummet,” Hurst says.

    He says there are concerns the company is coming into the mobile market far too late. “The group’s CEO, Jeffrey Hedberg, has a lot of work cut out for him. Telkom is a big ship to turn around,” he says.

    Though investors aren’t particularly confident, BMI-TechKnowledge MD Denis Smit says there are important strategic reasons driving Telkom’s decision.

    He says the mobile business will need to be successful but, more than that, Telkom simply needs a mobile business. “Mobile broadband is the future and it needs to have access to that,” he says.

    South Africans have to wait only two more weeks to know exactly how Telkom will play its cards.  — Candice Jones, TechCentral

    • Subscribe to our free daily newsletter
    • Follow us on Twitter or on Facebook


    Avior Research BMI-TechKnowledge David Lerche Denis Smit Richard Hurst Telkom
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleTalkCentral: Episode 10 ‘Hot’
    Next Article Heita! Telkom Mobile gets a name

    Related Posts

    Listed: All the MVNOs in South Africa – 2025 edition

    19 June 2025

    MTN CEO edges Vodacom rival in pay stakes – but just barely

    18 June 2025

    TechCentral Nexus S0E2: South Africa’s digital battlefield

    16 June 2025
    Company News

    Banking on LEO: Q-KON transforms financial services connectivity

    14 July 2025

    The future of business calling: Voys brings your landline to the cloud

    14 July 2025

    How digital twins and AI are shaping the future of security

    14 July 2025
    Opinion

    In defence of equity alternatives for BEE

    30 June 2025

    E-commerce in ICT distribution: enabler or disruptor?

    30 June 2025

    South Africa pioneered drone laws a decade ago – now it must catch up

    17 June 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.