Just over a month since its unveiling, mobile fledgling 8ta has signed up 186 000 mobile subscribers, taking 0.5% of the mobile market.
8ta is the mobile arm of fixed-line operator Telkom, which today released its interim results for the six months ended 30 September 2010. Telkom reported a knock of R205 million relating to 8ta operational expenditure.
The fixed-line operator has set aside R6 billion over the next five years for the establishment of its mobile arm.
The newcomer has hit the ground running, introducing both prepaid, as well as post-paid packages. 8ta has also unveiled mobile data packages. All of these services have been accompanied with compelling introductory offers.
The newcomer is already closing in on its closest competitor, Virgin Mobile. Virgin, which entered the South African market in 2006, offering month-to-month contracts to subscribers and “liberating” consumers from long contract lock-ins, has seen limited success, holding about 0.7% of the market - 250 000 subscribers - after four years.
High ambitions
While 8ta is off to a strong start, the newcomer still has its work cut out for it if it intends to reach its targets of between 12% and 15% of the market within five years.
According to ICT research firm World Wide Worx, SA currently has 37 million actual mobile users at the end of September. This would mean 8ta would have to sign up 5.8 million subscribers to achieve 12% penetration, based on current numbers.
At the end of June, MTN reported 17.1 million subscribers, while Vodacom reported 23.2 million - giving it the lion's share of the market, at 53.2%.
Both mobile operators have been in the market for close on 20 years, while third operator Cell C, closing in on 10 years in the market, has only recently achieved between 13% and 15% of market share.
While analysts remain highly sceptical of 8ta's ability to reach these targets, they have also conceded that, with Telkom's influential backing, it might be possible. Additionally, if 8ta was to maintain the current growth rate month-on-month, it may achieve at least 12% within five years.
However, analysts have previously said the market is already saturated and 8ta will have to provide innovative and compelling offers if it is ever to reach these targets.
Nonetheless, 8ta has highlighted key elements of its strategy to maintain this initial momentum, including converged offerings; greater infrastructure coverage and a strong distribution channel.
Keeping momentum
8ta intends to unveil converged products to corporate and consumers in the first half of the 2011 calendar year, which the company believes will be particularly compelling for corporate customers.
The mobile operator has constructed 800 base stations. “As previously announced, we are working through an order to build a further 2 000 base stations,” states 8ta.
Analysts have previously noted that a strong distribution channel is vital for 8ta to maintain a strong subscribership growth. To this end, 8ta maintains that it has an extensive distribution channel through Telkom.
8ta is working with 51 dealers with 3 000 points of presence around SA. “We have also ensured that we are able to reach deeply into semi-urban and rural areas through the use of independent micro distributors,” concludes the company.
Share