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Heita Telkom!

BILLBOARDS AND ADVERTISEMENTS on television with curious black and white imagery incorporating the word “Heita” – a Xhosa word meaning “Hello” – have appeared countrywide with nothing other than a purple dot to suggest what’s being marketed. It’s since emerged that Heita is to be the brand for Telkom Mobile’s consumer services when it comes to market.

The new brand made itself public around the same time journalists received a cryptic invitation from Telkom to an event in Johannesburg that surely will be the launch of Heita and the Telkom Mobile subsidiary that will take South Africa’s incumbent network operator into the cellular market – where it will come up against Vodacom, MTN and Cell C.

Analysts are quick to write off Telkom Mobile. Those canvassed by Finweek say Telkom Mobile doesn’t stand a chance – despite the fact SA has fewer mobile operators than most other markets, including those throughout Africa. Telkom just doesn’t have what it takes to compete, it’s said by some.

But not everyone dismisses Telkom’s move to mobile. Analysts at World Wide Worx and sister company WWW Strategy say Telkom Mobile may well make inroads over the long term. World Wide Worx MD Arthur Goldstuck says you can’t write off Telkom, given its scale. “Telkom still has a massive customer base – equivalent to the contract base of mobile networks – although its fixed-line base is eroding year on year.”

Goldstuck says the erosion Telkom is experiencing is largely in its consumer base, which the Heita brand seems to be squarely aimed at. “Its rollout of fixed-line prepaid services hasn’t ever really appeared above the radar in terms of changing telecoms in the SA market – and that’s the experience base it brings to bear on mobile.

“Its best bet would be to buy Cell C – it would probably find it a lot cheaper in the long run. But it doesn’t seem it’s going to do that and it seems very much as if Heita is in tune with Cell C’s identity for its low-end packages,” says Goldstuck.

“If that’s an indicator of where it’s targeting its services then other issues emerge – such as the fact the prepaid market has the lowest average revenue per user. It’s also a market where Rica (the Regulation of Interception of Communications and Provision of Communication-Related Information Act) has had an impact and it will be increasingly difficult to penetrate. For example, Vodacom shed 3m prepaid accounts in its last reporting period, thanks to Rica.

“Nevertheless, generating massive hype post-launch might see a take-up for Heita. However, over the medium term it could be quite disastrous. But given the scale and infrastructure of Telkom it could become viable over the long term.

“One big advantage Telkom has is that more than 4m people in SA receive pieces of paper from them in the post every month and that little mail drop could be key to its new service,” Goldstuck says.

WWW Strategy’s Steven Ambrose says its existing infrastructure places Telkom in a decent position to set up and run a mobile network. “As a network operator its systems already allow it to bill, manage and support. Telkom also already has a retail presence that gives it an immediate head-start, whereas other mobile networks had to build capacity from scratch,” Ambrose says.

Telkom also has infrastructure for backhaul capacity that powers the core of its network apart from just cellular. “It’s already a significant network operator in this country,” says Ambrose. “But it needs to be more nimble and customer-centric to deal with mobile.”

Ambrose says acting Telkom CEO Jeffrey Hedberg also knows the mobile space intimately, having previously served at the helm of Cell C. Ambrose adds Telkom will have to make a big splash in terms of pricing in order to entice consumers and in the corporate space it will have to approach existing customers with a mobile offering that supplements the services it already provides.

It’s expected all will be revealed over the next two weeks. Telkom is currently in the middle of a major transition, and while investors may not be interested there are long-term prospects to consider.
 
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