Virgin Mobile SA has reduced its subscriber targets for the year. However, the fourth cellular operator, which offers its services through Cell C's network, says there are still opportunities for growth in the local cellular market.
Speaking at the Gordon Institute of Business Science, in Illovo, yesterday, Virgin Mobile CEO Peter Boyd said he is happy with the progress the company is making to achieve its new targets.
Boyd said the South African mobile market may look saturated, but there are still growth opportunities.
He noted the local cellular market, with its high tariffs, complicated terms and unhappy customers, presents an ideal opportunity for Virgin Mobile.
However, Boyd would not reveal the company's revised subscriber targets, nor give specific reasons for the downward move. The company said last year, shortly after its July launch, that it hoped to have between 200 000 and 300 000 users in 18 months.
Counting SIM cards
Cell C chief corporate officer Zeona Motshabi said the market may look saturated, but this is not the case.
She questioned how SIM cards are counted. Cell C and MTN do not count subscribers who have been inactive for three months, while Vodacom has a seven-month limit. As a result, the operators' views on the number of subscribers who are active are bound to vary, impacting on subscriber numbers, she explained.
Additionally, there are still opportunities among the sections of the population that live within the living standard measure 3-7, she noted, adding that this is almost 50% of SA's adult population of 30 million.
New category
Boyd said Virgin Mobile SA is making headway in strengthening its brand in SA. Research shows 20% of South Africans like the Virgin Mobile brand; however, closer scrutiny shows they don't know the brand or why they like it, he added.
The key will be for Virgin Mobile SA to simplify the complicated tariff language, provide competitive tariffs and speak to the heart of why the customer is unhappy with what is already being offered in the marketplace, he said.
Boyd noted that Virgin Mobile does not aim to compete directly with bigger operators Vodacom and MTN, but to set up its own category as a successful challenger.
"You don't have to be dominant in the market in order to be first."
Era of MVNOs
Boyd's view is in line with that of BMI-TechKnowledge senior analyst Richard Hurst, who believes the local cellular market is ripe for the entry of mobile virtual network operators (MVNOs).
Hurst noted that only those MVNOs that have exceptionally strong brands would succeed in SA. Offering low tariff structures is key to success, he added.
It remains to be seen whether the MVNOs will make a dent in the mobile market; however, they will benefit the mobile network operators by increasing users on their networks (and thus revenues), rather than being a threat, Hurst said.
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