With only hours before the highly-anticipated Telkom Mobile launch, analysts agree that despite the challenges of entering a saturated mobile market, the newcomer has more than one window of opportunity for success.
It is expected the fixed-line operator will unveil its mobile offering at a launch event this evening at Lanseria Airport; however, Telkom will not confirm this.
Nonetheless, Telkom Mobile is believed to be poised for launch, as movement in the company points to an imminent launch. These pointers include an ongoing interconnection dispute with competitors, an extensive Heita! teaser advertising campaign, indications of a strong smartphone play, and the securing of the '081' number range.
Although the industry has raised concerns over the success of Telkom's R6 billion mobile investment, analysts have pointed to a number of gaps in the industry which they believe Telkom Mobile must hone in on to be successful.
Suggested strategies
Richard Hurst, independent telecoms analyst, says Telkom is coming in at a disadvantaged position. He points out that Cell C, which launched after Vodacom and MTN, has had to battle to gain market share.
Hurst says Telkom will have to be more agile and innovative. “Coming in as the fourth player, it's really going to be difficult for them.”
WWW Strategy MD Steven Ambrose argues that there are strategies Telkom Mobile can employ to differentiate the company.
“Telkom must initially gain a critical mass of subscribers on their network, with a combination of prepaid and contract customers, as well as significant corporate and government customers. Being close to government will in all probability be of value in this regard,” he opines.
Ambrose argues that in the prepaid arena, good marketing and a competitive offering will create some churn in Telkom's favour.
Frost & Sullivan industry analyst Spiwe Chireka agrees and suggests the telco also focus on the enterprise space, in which mobility is a key trend.
She also suggests Telkom Mobile focus on the “multiple SIM trend”, as she maintains that the newcomer will be hard-pressed to take business away from the existing incumbents but might be able to offer a viable alternative.
Ambrose adds that service visibility and compelling packages will work in combination with a deep retail strategy, especially in the rural areas.
“Services are paramount for any successful venture in mobile, especially with prepaid. Number portability and ease of swapping SIM cards will make it easy for people to move, should they become disillusioned with the quality of Telkom's network or after-sales service,” he notes.
Convergence play
BMI-TechKnowledge director of research Brian Neilson maintains that a converged offering of fixed and mobile services is a strong strategy for Telkom Mobile to differentiate itself with.
“If Telkom tries to compete with a pure-play mobile offering, it would find itself in an untenable position, because on the one hand it would have to at least match the aggressively priced offerings in the market from the likes of Cell C, but on the other hand it still needs to make a return on its investment,” he explains.
Neilson suggests the best approach would be to focus on the fixed mobile convergence play, and try to retain its existing fixed-line customers and grow the overall revenue per customer. This does not preclude Telkom from challenging a few niche customer groups with pure mobile offerings, he notes.
Telkom has confirmed convergence is an integral part of its strategy, arguing that its dominance in the fixed-line market will give it a competitive advantage.
“This is particularly so as wireless growth slows and converged data becomes more prevalent. A product range spanning both mobile and fixed value pools will assist Telkom to defend itself more effectively against competitors and to grow revenue,” says the telco.
Chireka explains that unlike the slow-paced fixed-line market, the mobile market involves quick turnaround and business agility. Mobile will become a noteworthy contributor to Telkom and will likely offset slow growth in the operator's fixed-line business, she concludes.
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