With only a few months to go until Telkom launches SA’s fourth mobile network operator, the question on many people’s lips is whether the fixed-line incumbent will start a price war with Vodacom, MTN and Cell C.

Telkom hasn’t yet finalised tariffs for its mobile offering. The company’s MD, Nombulelo “Pinky” Moholi, says these must be still be approved by the board.

But she concedes that in the prepaid market price is a big factor. Asked whether Telkom will trigger a price war, Moholi tells TechCentral: “We are responsible. We will not do anything that is value destroying. But if it’s value enhancing we will do it. There’s a lot of room between the price of a fixed-line call and a mobile call.”

She says competing is also not only about price. “You can offer better value and better network quality, too,” she says. “Of course, value to many people is about price.”

Moholi says the mobile business, which will be launched before the December 2010 holiday season, will focus on both contract and prepaid consumers.

But analysts have said Telkom’s opportunity in mobile is in the corporate market, where it will be able to cross-sell solutions, and not in prepaid. They have questioned whether Telkom should focus on the prepaid market at all, saying the only option in this space may be for Telkom to compete aggressively on price.

“You can’t ignore the prepaid market,” Moholi says. “We are not saying the corporate market is not our target market, but we can’t ignore prepaid.”

She says it’s “unfair” of analysts to suggest Telkom can focus only on the contract subscriber market, where the cost of customer acquisition is high. “We will not ignore prepaid, which is a very big volume business.”

She concedes, however, that it’s in the contract market where Telkom will be able to offer products that are most differentiated from its rivals. “All I can say is that we are uniquely placed to offer differentiated services,” she says.

“That doesn’t mean they’ll be available at launch. We will start with ‘me-too’ products at the beginning and roll out new services as we go.”

Meanwhile, Moholi says Telkom’s new mobile operator will not be called Telkom Mobile. Rather, in the retail market at least, the company plans to come up with new branding.

She says the company has a shortlist of two names for the new business, and will choose one of them once it has completed market research.

In the business mobile market, it’s likely Telkom will retain its branding. It’s not yet clear whether the Telkom brand will feature at all in the consumer offerings.

Moholi says Telkom’s market research has shown it should do well in both the prepaid and corporate segments.

Telkom’s mobile network will offer both second- and third-generation services in the 1,8GHz and 2,1GHz bands. It will roam on MTN’s network outside the cities. – Duncan McLeod, TechCentral