Mobile newcomer 8ta has revealed what it calls “ultra-competitive” contract offers.
However, an industry commentator argues that the offers are disappointing and provide little differentiation from competitors.
8ta yesterday unveiled five new contract voice deals on a range of cellular devices - one of which offers per-second billing. The subscription fees for the contract options range from R90 to R500. The company also unveiled three data packages.
Key to the new offerings is 8ta's allocation to on-network calls. For example, Contract 2, at a cost of R130 per month, offers 130 free minutes for 8ta-to-8ta and national fixed-line calls. The contract offers only 30 free minutes for calls from 8ta to other mobile network operators. All five of the contact deals make similar differentiations.
WWW Strategy MD Steven Ambrose argues that, although the rates are competitive and the packages are broadly comparable to what else is available in the market, 8ta's approach is flawed.
“The main differentiator is on-network calling, and this is not strong enough at this point in the growth of 8ta, to make it compelling to the consumer,” argues Ambrose.
“As 8ta grows, the value of on-network calls will increase in value, and is fully sustainable by Telkom, the problem is that it will do little to grow market share initially, which is what is needed for the whole on-network differentiator to work,” he points out.
Not enough
The mobile operator has included introductory offers to attract subscribers, but Ambrose argues that these are not compelling enough especially for contract customers.
8ta's introductory offer for its contract deals awards the first 100 000 subscribers the opportunity to nominate a Telkom landline to which the subscriber will be able to make unlimited calls for the duration of their contract.
Additionally, subscribers that send five SMSes in a day, receive 50 bonus SMSes at no extra cost to use that same day.
“The initial specials, such as the free calls to one number, and the free SMS offer, come across as too much marketing and hype, and offer fairly low sustainable value, especially to contract customers,” opines Ambrose.
“Contract customers have traditionally looked at handsets first and then overall cost and value. On the handset front 8ta have a good range, on the value side the packages are well priced; however, on overall cost there does not appear to be any real compelling reason to change or take out a contract with 8ta,” he says.
But Smit disagrees: “I think 8ta is trying various combinations of offerings and we have not yet seen the full extent of its creative efforts. Some of these are likely to 'stick against the wall' more than others.
“I think they are toeing a fine line between being aggressive without being stupid. From what I hear, they have signed up a substantial number of subscribers in absolute terms, which shows that they are doing something right. It is too early to make predictions, however,” he offers.
Off target
Ambrose predicts the operator's contract offerings will do little for 8ta's ambitious market share targets.
8ta aims to capture between 12% and 15% of the local market within five years - almost eight million subscribers, according to current market figures.
According to IE Market Research's 2010 SA Mobile Operator Forecast, the current number of mobile subscribers in the country is 51 million. Based on this figure, 8ta's target of 15% market share means the company aims to secure 7.65 million subscribers by 2015.
“8ta must offer far more innovative packages and value-adds, to compete more effectively with its main competitors MTN and Vodacom. The current offers will in all probability do little to assist 8ta in getting to their stated target of 12% to 15% of the market,” concludes Ambrose.
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