Telkom has set its sights on taking up to 15% of the SA market in the next five years with its new mobile network, 8ta.
Analysts say the target is ambitious, but some think it is doable.
Amith Maharaj, who heads 8ta, is confident of growing the new network’s market share relatively fast, especially given that mobile broadband is still in its infancy.
He says that over the next five years 8ta hopes to have between 12% and 15% of SA’s mobile subscriber pie.
However, analysts are somewhat sceptical about its ability to meet that target.
“It sounds very ambitious,” says Frost & Sullivan ICT industry analyst Spiwe Chireka. “It will have to add between 2% and 3% to its market share every year and there are not many ways to do that in our market.”
Chireka says 8ta could take advantage of the trend where users carry multiple Sim cards and switch between networks for the best deals.
“It could position itself as an alternative mobile operator, but it will have to take advantage of niche opportunities.”
Another alternative is to compete on price, though any price war could be a short-lived affair.
Maharaj says Telkom has designed 8ta’s network in a way that it will attract both prepaid customers and attract consumers to use the service as their primary means of communication.
Brian Neilson, director of research at BMI-TechKnowledge, says considering it took Cell C a decade to achieve a market share of just 10% Telkom’s plans would appear to be a stretch.
However, he says there have been cases elsewhere in the world where a new entrant has jumped its way up the market-share ladder.
“It is possible, but it would be highly unusual, and typically occurs because one of the other players slips up badly or fails to secure investment funding, whereas the new entrant has deep pockets and very effective marketing,” he says.
Neilson says Telkom needs to do something “earth-shattering” to achieve its 12%-15% target. “However, it is a good psychological flag on the hill for them to charge,” he says.
World Wide Worx MD Arthur Goldstuck has a different view. He says 8ta’s target is “entirely feasible”.
“Cell C did take a while, but they have achieved 10% and with far fewer resources than Telkom will have at its disposal,” he says.
Goldstuck says if the company were only to convince its fixed-line customer base to use its mobile offering, it would already have more than 10% of the market.
However, he says 8ta will have to ramp up its marketing effort to entice customers onto its mobile network.
Goldstuck describes 8ta’s tariffs as “good” but says Telkom could have been more aggressive. “It was a bit timid in its SMS pricing. I would have liked to have seen something bolder, as low as 20c even,” he says.
It costs 50c to send an SMS on 8ta, but if a user sends five messages on a day, they will receive another 50 free for use that same day.
In voice tariffs, 8ta’s voice rates stack up quite well next to its rivals. Mobile-to-mobile calls cost R1,50/minute at any time of the day; calls to fixed lines are 65c, much lower than on other networks.
Cell C has the closest rate to 8ta, offering a flat rate of R1,50 across all networks and all times. But Cell C doesn’t offer reduced rates to fixed lines.
Telkom has one other trick up its sleeve: every time an 8ta customer receives a call, they are given free airtime. So, if an 8ta client receives a three-minute call, they’ll receive one minute of free airtime.
Consumers have generally praised the voice rates on offer. But 8ta’s data rates have received a less favourable welcome.
Though consumers appear to be impressed with the R1/MB prepaid data rate (it’s R2/MB on other mobile networks), Telkom has been criticised for not being as aggressive in in-bundle data rates. For purchases of more than 1GB, the rate is 25c/MB.
Data rates on 8ta are far higher than the offers available on Cell C, where in-bundle rates are as low as 3,3c/MB on its top-end data-only package and where out-of-bundle rates are set at 39c/MB. — Candice Jones, TechCentral
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