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Red Bull Mobile takes flight

By Leigh-Ann Francis
Johannesburg, 09 Feb 2011

Despite initial predictions that Red Bull Mobile would be the country's second mobile virtual network operator, the international energy drinks company has instead partnered with third mobile operator Cell C to present SA's first niche focused mobile offering.

The joint partnership will see Cell C offer Red Bull Mobile (RBM) packages, which include two post-paid contracts and four smartphone devices, three of which are Android-based devices, powered by Cell C's recently unveiled HSPA+ network.

Red Bull will not open its own stores; rather, Cell C will offer the aggressively-priced packages in its stores from 25 February.

The first package, the RBM 100, costs R149 per month, while the second package, the RBM 200, costs R249 per month; both packages include free handset, voice minutes and data bundles.

The devices on offer include two re-branded Huawei Android-based smartphones, as well as the Nokia 5230 and Motorola MB525 smartphones.

The RBM 100 includes a choice of a customised RBM Android smartphone or Nokia 5230, including 100 voice minutes, 50 messages and 250MB of data. The RBM 200 offers a customised RBM smartphone or the Motorola MB525, 200 minutes, 100 messages and 500MB of data.

WWW Strategy MD Steven Ambrose maintains that Red Bull Mobile may face some challenges in handset dominance of the contract market in SA, and the actual cost of the contracts with the majority of mobile connections being prepaid.

“The contract or post-paid market has not shown large growth, with most of the spectacular growth in the past five years coming from data in corporates and prepaid,” he explains.

Cell C CEO Lars Reichelt explained that prepaid and data offerings are in the pipeline for Red Bull Mobile.

“The packages on offer from Red Bull Mobile are very attractive and will once again throw the proverbial cat among the pigeons in the market. It will be interesting to see if the other operators respond,” states Ambrose.

Niche success

When news first broke of RBM entering SA, the industry assumed the offering would be modelled as a mobile virtual network operator (MVNO).

On the back of the failure of SA's first MVNO, Virgin Mobile, also powered by Cell C, analysts were sceptical as to whether another MVNO would succeed. After revising its target from 10% to 1% market share, Virgin Mobile seemingly scrapped its market share aspirations, saying this wasn't its aim. Cell C announced today that it is selling its 50% stake in Virgin Mobile.

Add to this, analysts pointed out that the mobile market was already at saturation point and that a newcomer would have a challenging task of entering the market.

However, Ambrose argues that the mobile space has become rather staid of late, as the penetration of mobile phones has reached close to 100% saturation. The choices have been limited and very difficult to differentiate.

“The latest Cell C repositioning and their launch of low-cost, high-speed data services, has without question reinvigorated the market. Their challenge is to grow market share from the large amount of churn out there, and then to hang on to those customers. I do believe that the Red Bull initiative is a good way to add value to a rather commoditised market,” he maintains.

Ambrose explains that Red Bull Mobile is in fact more of a branded offering of Cell C than a true MVNO.

However, he argues: “It does not really matter to most consumers what the offering actually is, as long as it is compelling, well promoted, and widely available at attractive prices. Not many consumers actually realise that Virgin Mobile is an enhanced service provider with a unique brand offering running on Cell C's platforms.

“In truth, that actually does not make any difference and these offerings can be a compelling and useful way of creating differentiation and competition in the market,” he states.

Cell C explains that subscribers of the offer will be both Cell C and Red Bull Mobile customers; unlike Virgin Mobile, Red Bull will not do its own retail distribution. Furthermore, customers will access the Cell C network to utilise voice minutes and data bundles, and to this end will be Cell C subscribers.

However, customers will also have access to Red Bull Mobile features, explains Cell C, and will also be considered Red Bull Mobile customers.

Content appeal

Ambrose explains that there is a global trend, in saturated mobile markets, to niche and very strongly branded offerings from the various operators.

As such, the added features of the RBM packages include exclusive content including Red Bull Mobile TV featuring extreme sports events; free music, photo, games and video downloads; Red Bull sports updates; as well as local weather and news updates.

Customers will also receive exclusive invites to Red Bull events, such as the Red Bull Racing at the Top Gear Live Festival in March.

“Red Bull is a very aggressive and dynamic brand, and has huge appeal to the younger market. Their participation in extreme sports and other high-profile sporting and entertainment activities, such as Formula 1, also make the brand very inspirational and compelling,” Ambrose continues.

Reichelt explains the offering is ideal for the 15- to 45-year-old target market, noting that the offering will appeal to the energy of this age group. He adds that Cell C has tailored the offering around the lifestyles of its customers in line with its customer-centric strategy unveiled late last year.

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