Claims of a match between Red Bull and Cell C, to create a second mobile virtual network operator, have industry players questioning the wisdom of such a move.
This morning, a media report claimed Red Bull Mobile would piggyback off Cell C's infrastructure backbone. ITWeb has been unable to confirm the move.
In August, Virgin Mobile, already a seasoned traveller on Cell C's backbone, conceded its original aim of getting to 10% of market share was unrealistic.
The company had set that target on launch, four years ago.
After revising its target from 10% to 1% market share, the company seemingly scrapped its market share aspirations, saying this wasn't its aim.
Frost & Sullivan industry analyst Spiwe Chireka says Virgin Mobile banked on mobile number portability when it launched, which did not pay off because South Africans are reluctant to change service providers.
Chireka says if a new company tries to launch, positioned as nothing more than a mobile operator without offering a value-added service, such as free SMSes or media content, “they will fail”.
Flirty fizz
Should there be any truth to Red Bull seeking a foothold in the local mobile market, this would not be the first time the energy drinks giant flirts with an entry into the cellular space.
Towards the end of 2009, the company was set to release a mobile phone network across Europe, following an anticipated unveiling in Austria.
Internet portal for the UK arm of Red Bull Mobile, as well as a German version that went into in-depth detail about the handsets and network deals that were set to be available.
However, the network never took off, amid speculation that Red Bull could not break into a market controlled by mobile giants like Vodafone, Orange, T-Mobile and O2. It could face a similar hurdle here.
"It's just going to be part of a brand-building exercise, not a pure mobile play," says Richard Hurst, senior analyst of emerging markets at Ovum.
Lucky number?
A new South African entrant will come in as the sixth player in an already saturated market, making it very difficult to succeed, says Hurst.
Any new entrants will, at best, be a virtual network, using someone else's infrastructure and number range, he adds.
“Right now, looking at it, we've got a saturated market,” he notes. A new entrant would have to add value in order to attract subscribers, and will have to invest heavily before it starts reaping the rewards. “It's going to be very difficult”.
Telecoms newcomers have had an especially trying time of late, with latest arrival 8ta failing to live up to its initial widely-touted marketing promises. Telkom's mobile arm has found the going tough in wooing customers away from Vodacom, MTN and Cell C.
In its launch month last October, 8ta signed up 186 000 mobile subscribers, taking 0.5% of the mobile market. However, Chireka says this number is not significant and 8ta has not really disrupted the market as expected.
Neotel, another relative newcomer, is also battling to entrench itself, with continued dismal financial performance, plans to retrench staff, and guiding force CEO and MD Ajay Pandey gearing up to leave when his five-year contract expires in March.
Cell C, having operated in SA for a decade, only recently achieved between 13% and 15% market share.
Vodacom dominates, with 23.2 million South African subscribers as of September, which is 53.2% of the market.
MTN, which has been in operation since government opened competition in the telecoms sector in 1994, had 17.1 million subscribers at the end of June.
According to IE Market Research's 2010 SA Mobile Operator Forecast, there are 51 million mobile subscribers in the country. ICT research firm World Wide Worx puts the number of actual mobile users at the end of September at 37 million.
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