Telkom leads SA’s competitive mobile network market

Johannesburg, 24 Nov 2020
Read time 8min 50sec


It has been almost a decade since Telkom South Africa launched its mobile network and, despite some degree of scepticism in the market over its position as a fourth operator, the company has cemented its place as a market leader.

It has successfully enforced its data-centric strategy – based on easy access to affordable mobile data offerings and disruptive data-led smartphone and prepaid solutions for consumers like FreeMe and TelkomONE VOD service, as well as business-centric services including Telkom VoIP and BizExpander Fibre, as well as managed roaming service for MNOs.

It is all about access to a robust and reliable mobile network infrastructure that Telkom, via its multiple divisions, has invested in and securely established to guarantee its offer of integrated voice, data, fixed, mobile, IT and data centre solutions.

Telkom SA’s organisational structure includes five core business groups: OpenServe, Telkom Consumer & Mobile, Small Business with Yep! and BCX.

A robust network

Telkom has leveraged its extensive skills pool, its years of experience and technical expertise to establish its own 3G network, with dedicated 2 300Mhz spectrum that supports high-speed LTE/smart broadband connectivity.

In addition, the company is pushing ahead with its 5G network plans and has already begun testing the technology.

Andrew Dawson, Executive: Mobile Products and Services, explains: “Today, Telkom offers its customers access to affordable high-speed wireless broadband in a number of flexible ways, taking into account the needs and demands of customers across South Africa. The range extends from small prepaid data bundles across to postpaid smartphone products and extends to fixed LTE broadband access for customers requiring bundles all the way up to 400GB and unlimited offers.”

“We’ve been rolling out very aggressively an LTE, a 4G and 3G network, and that network is pretty pervasive in your major metropolitan and second tier areas, as well as some towns, which might be towns where we see very high roaming on Vodacom. So what we’re able to do is that we can distinguish our pricing for customers that are on our network only. Then we offer them what we call ‘smart broadband’ and that’s an on-network only tariff.”

It is about a streamlined product portfolio and go-to-market strategy that speaks to the data-hungry market, which has helped to catapult the company ahead of its competition.

Telkom has dominated the prepaid space with regards to pure LTE broadband from 10GB to 400GB offers. The company has purposefully tightened up the offering for this segment, making it easier to access and manage.

“Over time, we have been relatively balanced. You can get FreeMe as a bundle on our prepaid tariff. That is one of the reasons why we are still able to offer customers significant value on the prepaid side.”

Smart broadband is also now offered on prepaid plans, the most affordable in South Africa, which means direct access to a largely untapped market defined by the uptake of value-driven plans on its networks.

Industry recognition

The hard work has paid off for Telkom. According to the September 2020 Tarifica Score Report South Africa, the company still leads all operators in total awards within the overall postpaid market.

Moreover, the company earned 48 Top Value Plan Awards in September for the South African postpaid market, three more than it secured in August.

The report says the increase in awards is largely due to lowered pricing across “With Device” plans in the Light and Heavy categories. In most categories, Telkom’s price per gigabyte is much lower than the other operators – a factor that boosts most plan scores.

Dawson says Tarifica helps the company benchmark its strategy, direction and market placement.

The company considers it to be a reliable means of monitoring activity in the market, as well as the movements of its competitors. This ensures it keeps up with market trends and influences and guides the company on how best to respond.

“What they do is they recognise that the market is quite diverse. In South Africa, it is obviously extremely diverse, given that we have a huge prepaid segment, we’ve got customers right at the bottom of the pyramid who are recharging with R5 and they are just getting by. And then right at the other end of the spectrum, you’ve have got massively heavy consumers of voice and data. So the model takes these worlds into account and they’ve created profiles both on post-paid and prepaid and even on the data only stuff. And they use these profiles as almost a scoring mechanism, also based on input from customers,” Dawson continues.

Not easy

Telkom’s dominance in mobile telecommunications has not come easy.

As Dawson explains, a decade ago the company entered a market already dominated by established brands, and it was acutely aware of the reality that awaited it.

“It was very difficult to compete head-on with incumbents, they were deeply entrenched in that space. We can see what has happened to Cell C over the years trying to compete head-on with these two formidable forces and rightly so – they owned the majority of the market share, they were very strong, customers loved their brands, it was very difficult to gain any sort of respect in that space,” he says.

Leadership at Telkom understood it had to respond and not only secure a foothold, but cement is value proposition within an ultra-competitive market.

In 2013, it devised a strategy, one that positioned data for the future at the centre of its operation and focused on the development of a network to support this strategy.

Building a brand

Telkom continues to build its brand and understands the size of the task ahead of it, a challenge exacerbated by legacy based on the perception of being monopolistic, slow to act and inflexible.

To do this, it will drive access to key products covering the entire telecommunications services spectrum but spearheaded by its mobile business. This central silo has been incubated over time and now strategically interwoven into the consumer business.

Telkom's differential quality is affordable reliability. It is determined to ensure the brand and network is associated with value and cost efficiency, solutions that are competitively priced rather than simply thought of as ‘cheap’.

“Telkom upholds the viewpoint to unlocking value for customers through a best-of-breed blend of GB and rand value without, compromising on network quality and customer experience,” Dawson adds.

“We are trying to simplify things and trying to put the customer at the centre of things.”

And this is reflected in Telkom’s structured approach to its FreeMe offering, linking broadband services for prepaid customers. This unlocks a massive opportunity and secures access to a huge potential market, says Dawson.

FreeMe is a data-focused plan, which incorporates additional data that can be used for both WhatsApp and streaming (for example, from YouTube), and is designed for flexibility and to ensure value to all users, irrespective of how much they utilise, when, where and when.

FreeMe remains one of the few smartphone plans to offer additional data that can be used for WhatsApp communication (both calling and messaging) as well as music and video streaming data that can be used via Telkom content partners – including but not limited to the likes of YouTube, Netflix, Showmax, Apple Music, etc. In addition, a substantial allocation of on-net calling minutes across the entire Telkom Fixed and Mobile customer base, makes it easier for customers to stay in touch and also provide a compelling reason to get more family and friends to join the Telkom mobile network.

Mobile network credibility

The company remains focused on entrenching its value proposition of affordable, easily accessible data and resilient, reliable network infrastructure to the market.

Despite its accolades and industry recognition, the company believes that many customers do not immediately associate the brand with the mobile services space.

Underpinned by the hugely successful roll-out of its FreeMe offering in 2016, Telkom has continued to adopt a meticulous approach to transferring value to the customer.

And its value proposition is consistent. This is reflected through its contribution towards the post-paid segment, where purchasing decisions are very much device-play.

“Customer purchasing decisions are based on value, not just what value they get, but what device they can purchase at the time of getting a post-paid contract,” says Dawson.

Telkom aims to differentiate in the market by driving a SIM-only proposition for customers.

Dawson continues: “With SIM only, we drive it as a month-to-month proposition, which means customers are not being locked into 24-month contracts. That has been a bone of contention in the South African market for a long time.

“If you are a consumer in the South African market and you’re wanting either a post-paid or hybrid tariff, you have no other alternative but to move to Telkom if you are looking for value. We offer the South African consumer the most value.”

Customer-focused company culture

Telkom’s pricing and solution portfolio demonstrates a shift in focus for the company from being product-centric to being a customer, market-level business, initiated since 2018.

Dawson says this focus and success in the market is largely attributable to the company’s leadership under Serame Taukobong, CEO for Consumer Business and Mobile, who joined the company in 2018, and Group CEO Sipho Maseko, who joined in 2013.

Executive management is dedicated to championing value for the customer and driving home the value of accessible, affordable data via a strong network infrastructure. That is the overarching objective.

Telkom has established itself as a successfully run company that is relevant, cost-conscious and meets the need for affordability during these unprecedented challenging times.

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