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Cellular's new frontier

SOUTH Africa’s largest cellular operators Vodacom [JSE:VOD] and rival MTN [JSE:MTN] have realised that fibre is the “next frontier” and they have been making appropriate plans to tap into this market.

The operators see this development as an opportunity to add more worth to their products and services while at the same time creating more shareholder value.

But these plans, which include the delivery of video-on-demand (VOD) services by Vodacom and MTN, should cause some discomfort to MultiChoice – the owners of the country’s biggest pay-TV operator DStv.

While MultiChoice’s local rival, Star Times, is failing to gain any significant traction – despite launching low-cost pay-TV packages in an attempt to entice new customers – the cellular operators could prove to be a different kettle of fish.

If Star Times doesn’t get its act together to offer compelling content, it faces being relegated to the scrapheap of history – it could even be gobbled up by one of the telcos.

DStv, which is owned by Naspers, is best advised to move quickly to partner with the cellular operators so that it can gain access to millions of mobile phone SIM card users. DStv can do this by simply providing relevant content to the telcos.

MTN's new marketing boss Larry Annetts is readying to turn the local telecoms market upside down.

He wants MTN to be more relevant to its customers’ expectations, including creating extra perks for subscribers.

Annetts plans to move MTN customers away from traditional telephony – voice calls, SMS and access to basic data – to VOD. He also wants to make the internet more accessible to them.

“Rolling out video-on-demand, FTTH and making internet more accessible to consumers is really on top of my agenda,” Annetts said. “I think it is going to be exciting for a South African consumer to be a customer of MTN.”

MTN may have tipped its streaming direction by recently rolling out MTN Sky bundles and through a competition to win a small aeroplane or cash valued at R1.5m. By all accounts, this is a clever strategy to entice customers to buy more data.

The company has already thrown in an exciting promotion to retain its voice call users. It is offering subscribers R60 bonus airtime every day if they talk for R6 per day. Obviously, this provides MTN with a first mover advantage and gives it a wider scope to be a leader in the advancement of content delivery in the country.

Annetts has found the right approach to prepare MTN for delivering compelling content.

He has started by appointing relevant ambassadors for the MTN brand that appeal to the mass market and appointed Mafikizolo, a local multiple-award winning Afro-pop music sensation, to connect with current and potential customers through their popular music.

What is clear, however, is that this might be a first step to making MTN more relevant and in touch with its mass market.

Given that the mass market loves Mafikizolo, it could make MTN’s delivery of content such as VOD to this audience very exciting.

What’s more thrilling is that MTN through Annetts’ plan will make local music and superstars more prominent, and use MTN as a delivery digital platform for music.

In a way, MTN is cleverly using marketing to look for profitable opportunities in the mass market by delivering more lifestyle value-added services. Hopefully, this will enable MTN SA to improve its revenue and lock in profitable customers.

While MTN is marching ahead with its move to deliver VOD, Vodacom is in its final lap of buying Neotel – the country’s second fixed-line telephone group – to be able to provide better data products to the mass market.

MTN pulled out of the race to buy Neotel, perhaps in anticipation of success in its efforts to partner with Telkom Mobile.

Telkom has also signed a heads of agreement with MTN to take over financial and operational responsibility for the roll-out and operation of its radio access network (RAN).

This is likely to help MTN deliver VOD and FTTH services to the mass market through Telkom’s fibre network, which is the largest in Africa.

Just maybe, Vodacom may surprise the market and partner with DStv to deliver much-needed VOD.
But it’s time to deliver VOD and stop pussyfooting around.

* Fin24 is part of Media24, a subsidiary of Naspers.

 - Fin24

*Gugu Lourie is a former correspondent for Thomson Reuters, Business Report, Finweek magazine and Fin24 (writing a blog titled 'Googled'). He is the editor of techfinancials.co.za. Views expressed are his own. Follow him on #twitter @LourieGugu


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