Red Bull’s plans to launch a mobile virtual network operator (MVNO) in SA, piggybacking off Cell C’s network, could be the first of many such entrants, analysts say.
Rumours are circulating that another MVNO, backed by an airline, could follow the energy-drinks company’s entry in the market.
Also, a well-placed industry source says Cell C is creating a platform to house MVNOs and is actively pursuing opportunities in this regard.
TechCentral broke the news on Wednesday that Red Bull will launch an MVNO in partnership with Cell C. The launch could happen as soon as next month.
Red Bull confirmed in a brief statement late on Thursday that it would enter the market, becoming the country’s second MVNO after Virgin Mobile.
But the company, headquartered in Austria, will have to rely on more than just its famous brand if it’s to be successful in SA’s mobile telecommunications market.
Analysts say it has a strong chance of success but will need to be more than a me-too player.
Virgin Mobile, started in 2006 as a joint venture with Cell C, has not achieved the sort of market share it had hoped for, despite recent strong growth. Now Cell C is selling its 50% stake in the Virgin business to cellphone distributor Allied Mobile.
Andrew Snead, senior partner for sub-Saharan Africa at telecoms consulting group Delta Partners, says for an MVNO to work anywhere in the world it needs to have a clear value proposition.
Though Snead can’t speak directly about the Red Bull Mobile launch because he works closely with Cell C, he says MVNOs have typically done well when markets are more mature.
“Given that SA has over 100% [Sim card] penetration and stagnating growth, MVNOs can offer something different. But they have to keep the economics in mind,” Snead says.
MVNOs must offer unique value to customers, perhaps by providing discounted tariffs, or offering value-adding content, says Snead.
BMI-TechKnowledge MD Denis Smit thinks Red Bull could surprise the market. “It’s no longer good enough to bring in a player that is only trying to claw at minutes,” he says. According to Smit, MVNOs must be able to provide value to subscribers on top of those minutes and he thinks Red Bull can do this.
He says the rise of broadband-enabled smart devices such as smartphones and tablet computers will bring a new dimension to companies hoping to differentiate themselves in markets, especially in terms of marketing and branding.
“Red Bull is a marketing giant, and can take advantage of promotion opportunities that come along with a niche mobile service,” Smit says.
He says the business case for an MVNO entering the SA market improves when one adds location-based services, applications for phones and tablets, and falling mobile voice and data prices.
“It’s all about eyeball management. These services give companies the opportunities they have never had before. There are revenue opportunities here well in excess of simply selling minutes, provided they do it right,” Smit says.
It’s understood Red Bull Mobile will target niche markets, building on its extensive eventing profile in SA. It will differentiate itself by pushing exclusive content to its subscribers.
Red Bull holds about 400 events a year in SA, ranging from surfing exhibitions and adventure sports to high-profile music events. Internationally, the company is well known for its sponsorship of Formula 1 and for its popular Air Race.
Red Bull has already launched MVNOs in Switzerland, Hungary and its home market of Austria and has reportedly signed a deal to launch a similar product in Germany. It’s been most successful in Austria, where it piggybacks on Telekom Austria’s mobile network.
Smit says the company must take a broader strategic look at the market and not simply copy existing models that other players internationally have used. — Candice Jones, TechCentral