Telkom enters ring

2010-10-17 13:19

Johannesburg - Analysts have welcomed the launch of Telkom [JSE:TKG] new mobile network ­operator, arguing that it would give rivals a run for their money.

The telecommunications group disclosed the details of its new mobile network brand, which will be known as 8ta.

From tomorrow the cellular ­network will roll out prepaid cellular services and will follow up with post-paid (contract) packages in ­November.

Corporate services are expected to hit the market within six months.

Sisa Rafuza, a portfolio manager at Metropolitan Asset Managers, said on Friday that 8ta would in the long run pose tough competition to Vodacom and MTN, South Africa's ­dominant mobile network operators.

Cell C, the country's third-biggest cellular company, has failed to take a big chunk out of the market shares of Vodacom and MTN despite launching in 2001.

"Telkom is not a new company and one of its strengths is its brand equity, unlike Cell C, which entered the market as a start-up," said Rafuza.

"I believe Telkom is going to make inroads into the local market because it has the infrastructure and an existing customer base, which it can sell its products to. Cell C had no customers to speak of when it entered the market."
Amith Maharaj, managing executive of Telkom's new mobile division, said the network already had 800 live base stations nationally and made use of a roaming agreement with MTN to provide coverage in areas where Telkom's network had not been rolled out yet.

A further 3 200 base stations would be constructed over time.

"The new network has been ­designed using next-generation technologies. Our base stations are software upgradeable to LTE (Long Term Evolution, the latest standard in mobile network technology) with the Huawei infrastructure we are ­using," he said.

Afena Capital telecoms analyst Khulekani Dlamini said he did not ­expect Telkom to start a price war with its rivals in a bid to lure customers away.

"I just do not think Telkom is going to create a price war by incentivising consumers to move over to its ­products," Dlamini said.

'New era'

He added that Telkom should ­rather focus on data products as it had developed infrastructure to ­satisfy the needs of consumers ­wanting this product.

National Consumer Forum chairperson Thami Bolani welcomed the launch of the new mobile network, but raised concerns about Telkom's ability to provide services efficiently.

"Telkom's track record does not ­inspire much confidence and we are doubtful this network will satisfy the needs of the vulnerable communities," Bolani said.

"For instance, we have offices in Mpumalanga's KwaMhlanga that don't have access to the internet. When we complained to Telkom, we were told that installing the internet in that area won't be profitable."

Maharaj said this week that the new mobile network would encourage more usage of mobile voice and data services.

"South Africans talk two to three times less on their mobile phones than other emerging markets.

"I'm not exaggerating when I say that this is the start of a new era in mobile phone communication in South Africa. Consumers will at last have a real choice," he said.

8ta will offer flat prepaid rates that do not differentiate between peak and off-peak periods.

"There is a single, per-minute price for calls that stays the same 24 hours a day, seven days a week. We have ­designed 8ta to be simple to understand and have removed the clutter," ­explained Maharaj.

Calls from 8ta to landlines in South Africa will be charged at 65c a minute while calls to other cellular networks will be R1.50 a minute.

International calls to more than 100 countries will cost R2.50 a minute. Data connections are billed at R1 per megabyte, but 8ta will also have data bundles available with data prices from 25c a megabyte.

The network will allow speeds of up to 7.2MB for downloads on HSPA 3G technology.

8ta will offer free airtime for every call made on the network at a 1:3 ratio. For example, if a subscriber spends 30 seconds speaking on the phone, 8ta will credit their account with 10 free seconds, which can be used for calls any time of the day to any local network.

8ta will also give subscribers 50 free SMSes to use on days when they send more than five paid-for ­messages. The free messages will ­expire at midnight on the day they were earned.

"Subscribers will be able to see how many free seconds they have earned immediately after a call," said ­Maharaj.

  • Greg - 2010-10-17 14:45

    Maintain a good attitude and service and you will succeed. Mess your customer around and you will loose out. Cell C slipped because of their attitude in the bringing.

  • Tird of crooks - 2010-10-17 14:54

    Now thats what i call (pun intentd) competition

  • Welcome - 2010-10-18 08:20

    Come on Telkom this is your time to shine!

  • paul - 2010-10-18 09:06

    please get facts straight, CellC, SAs smallest network operator....not third biggest

  • Don't Get It - 2010-10-18 13:36

    What was the rationale behind selling off Vodacom if they always wanted a piece of this market? Now they want to play catch up.

  • Voltage - 2010-10-18 16:10

    Telkom want to offer datab bundles with the lowest rate at 25c per meg??? Vodacom offer 17c per meg??? Still planning on ripping the consumer off i see

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