Reunert subsidiary, cellular service provider Nashua Mobile, on Thursday launched a voice-over-Internet Protocol (VoIP) service called EasiVoice in an effort to deal with the strain on its least-cost routing (LCR) services due to lower mobile call termination rates.
Nashua Mobile has a significant LCR base, with 70 000 Sim cards in the field billing R1,2bn/year to customers. Newly appointed CEO Andy Baker estimates LCR makes up about 20% of the company’s revenue.
Baker says the company will canvas its LCR customer base in an effort to convert them to the VoIP solution as “quickly as possible”.
Late last year, Nashua Mobile engaged in a round of retrenchments to reduce costs as pressure on its LCR business grew.
“We understand that competitive pressures are such that we have to move aggressively with this product from a commercial point of view,” he says.
The LCR industry has come under significant pressure since the first mobile termination rate cuts came in effect in March last year. Termination rates are the fees that operators charge one another to carry calls between their networks. LCR operators have taken advantage of arbitration opportunities that presented themselves due to the high rates.
Most LCR players are now moving to mitigate against the losses by moving customers to VoIP solutions. Vox Orion is well on its way to converting its LCR clients to its Cristal Vox VoIP product and Altech Autopage Cellular has partnered with sister company Technology Concepts to develop similar products.
Nashua Mobile is turning to VoIP late in the game, with operators having cut termination rates for a second time earlier this week. However, Baker is convinced that the company is in a good position to make its new offer work.
Pricing for the service is aggressive, and Baker is hoping it will drive customers onto the new service quickly.
Commenting on the sustainability of the aggressive pricing, Nashua Mobile executive head of marketing Tim Walter says: “It’s a volume game. If we can gain the volumes, even on the low margin, it is still worthwhile.”
Nashua Mobile will offer access through a range of mechanisms, including Telkom’s digital subscriber lines and Diginet lines; WiMax, through partnerships with Broadlink and Vodacom Business; primary rate ISDN services; and cellular.
The company also has a switch installed at data centre operator Teraco and piggybacks off the networks developed by VoIP operators ECN and TelFree.
Nashua Mobile’s parent, Reunert, is also believed to be shopping around for a provider with a network and customers to bolster the company’s plans. However, Walter says Nashua Mobile has no plans to be a network provider.
Reunert is cash flush, sitting on R1,8bn in free cash at 30 September 2010. — Candice Jones, TechCentral
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