The mobile payphone industry now supports around 50 000 operators and could be worth as much as R50 million per month to the networks (R600 million a year), estimates Mark Levitt, business analyst at SAICOM, a cellular payphone service provider.
"Assuming the operators have families, one could conservatively say 100 000 people depend on the income from mobile payphone units on their premises, which brings them a revenue share of the cost of R2.80 per minute to the user."
It makes sense
Outlining the benefits of mobile payphones over fixed-line units, Levitt says the cost of phone calls is "quite comparable" with fixed payphone call charges, although "a bit more". "However, most calls tend to be to other cellphones, so the price tends to be better on the mobile payphone.
"The benefits are numerous. For one, the units are mobile, which means flexibility of location."
SAICOM, at four years old among the first in this market, offers Psitek's Adondo unit, which runs on the networks of all three mobile operators, depending on the contract. A normal phone is attached to the portable unit.
"Mobile payphones are the responsibility of one operator in every case," adds Levitt. Since the unit is at the business operator's place of business, this means maintenance and vandalism represent less of a problem than in fixed payphones."
The call cost is also less than prepaid cellphone rates, which can be as high as R3.60 per minute, he says. This means it is a good alternative to prepaid cellphones in these areas. If there is already a preponderance of prepaid phones in a specific area, users could keep those for incoming calls and use Adondo for making their calls. "Typically, prepaid customers pay for the first minute [and] per-second-billing tends to be expensive compared to the relatively cheaper time increments available in mobile payphones."
An important industry
"Operators often don't qualify for contracts themselves," adds Levitt. This means SAICOM and other cellular payphone service providers, like Amafounfoun and Tofo, take on the risk of the contract. "Our risk is covered by the operator's obligation to pay us a certain minimum amount for the duration of the contract," he says.
"This creates quite an interesting market dynamic. We take these high-end contracts from operators, which, if you consider our 7 000 units and the 50 000 in total throughout the country, bring quite a bit of money in for mobile payphone service providers and the operators, and bring communication to all South Africans."
Levitt says the revenue so generated, the dependency of families on the operators' income from this service and the networks' dependence on the service providers' good business practices make this industry a prime candidate for regulation.
Currently, in lieu of a phone upfront with every contract, service providers receive cash back. This should be treated as a business liability until the contract has run its course, but nothing stops a service provider from spending that money and falling into arrears, impacting on the cellular network's business.
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