Virgin Mobile SA has exceeded its self-imposed launch targets, signing up more than 300 000 subscribers since it started operations in SA, 18 months ago. It has also grown in size, employing 350 people locally.
Since its inception, market watchers have expressed doubt as to whether the company could compete effectively in a market that has 87% mobile penetration and is facing saturation.
However, Virgin Mobile SA CEO Peter Boyd says the company is not in SA to compete for subscriber numbers, as it does not have its own network, but has positioned itself to target higher average revenue per user (ARPU) clients.
"We need to get good subscribers who like us, want to recommend us to their friends and deliver higher ARPUs," he says.
This is unlike the strategies adopted by bigger rivals Vodacom, MTN and Cell C, which have developed product offerings for the lower end of the mobile market, which still offers some untapped potential.
MNP disappoints
Last week, Vodacom announced its local subscriber base grew 4.1%, to 24.3 million, between 30 September and 31 December 2007, retaining its market share of 55.6%. MTN has also maintained its 36% local market share, while Cell C reached more than three million subscribers last year.
Virgin's target market includes people looking to switch from other providers because they know they are not getting what they want from their current provider, Boyd explains. "Even if the total market doesn't grow, the company would still be able to sustain its growth."
Boyd does, however, admit the extremely low uptake of mobile number portability (MNP) in SA has been a disappointment, but says the situation is likely to improve in future.
He explains that the virtual network operator wants to focus on providing strong customer service and drive its brand in the local market.
Virgin Group brand director Fiona Ross says the foundation the company has laid is visible in terms of awareness of its service offerings, as well as satisfaction levels.
In a brand tracking study conducted on 800 metropolitan consumers (HHI>R2 500) last year, 68% of respondents were spontaneously aware of Virgin Mobile, while 83% were aware of the company when prompted, says Ross.
About 64% of respondents were open to using Virgin Mobile's services, she says. "There was a very high level of satisfaction among those who are using Virgin Mobile services, with 90% saying they were very satisfied or delighted."
Slow to communicate
Virgin Mobile SA's perceived lack of performance locally was further aggravated by the company's unwillingness to discuss its subscriber numbers, or communicate operational performance to the local market.
However, Boyd says the company is not trying to hide anything. "We just don't want people to focus on subscriber numbers because that's not the reason we're here [in SA]."
Boyd would not disclose the proportion of postpaid and prepaid customers comprising Virgin Mobile SA's total subscriber base. However, he says there is a "healthy split", which is in line with the nature of the company's users.
He would also not comment on the ARPU levels the company is targeting.
World Wide Worx MD Arthur Goldstuck notes that the company offers a small number of clear-cut offerings, which enables it to live up to claims of cutting through the clutter and being more honest about what it offers.
MarketWorks business advisor Steve Edwards says while Africa may present more paradoxes than the company's marketing machine is used to accommodating, it is unlikely that any of the challenges it faced were unexpected.
"Screw it or not, [group CEO Richard] Branson's risks are always calculated and he would have had a pretty good idea of where the venture could go and what its real potential was," he says.
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