Telkom Mobile is all the talk
The quasi-parastatal will however have an uphill battle to win back customers
It was at a sunny birthday breakfast that talk about Telkom came up. But instead of the usual complaints about poor service, the conversation bordered on unlikely enthusiasm. “Have you seen the Telkom Mobile deals? They’re insane!”
That was by a lawyer friend, who, like me, has been a customer of the same cellphone network for years. Despite Vodacom burning a hole in my pocket, especially when I inevitably leave the land of the in-bundle rate, I have stayed with it.
Switching networks i nvolves inconvenience and, for the most part, Vodacom has never left me in the deep Karoo without communication to the outside world. Willingly moving to Telkom, the quasi-parastatal that has maddened many a South African, is something I would never normally consider. But here’s the thing. I am. My husband is moving to Telkom Mobile, my friend has cancelled her contract and her partner has already made the switch. Is this a sign that, unlike many other benighted stateowned entities, Telkom is changing?
Despite being a small mobile operator, the answer may just be yes. Chalking up losses of R2.2-billion three years ago, in its latest annual results, released in June, Telkom revealed that its mobile division has now broken even.
But, say experts, despite the company’s competitive offerings, Telkom still faces a “perception problem”.
Telkom Mobile’s new FreeMe offering, launched in late July, is routinely trumping the competition, according to research by Tariffic, a cellphonespend management company. In a recent analysis done using its online comparison tool, it found that, based on three different user profiles, for a SIM-only contract, the FreeMe packages saved consumers an average of about 24% a month.
Antony Seeff, Tariffic’s chief executive, said that what has made the packages unique is their datacentric focus. “Although Telkom’s data tariffs have always been well priced, Telkom is now effectively offering data contracts to voice users who can then pay very competitive out-of-bundle rates to make voice calls,” he said.
They come with enticing freebies, he added, such as free WhatsApp usage, free calls to Telkom mobile or landline numbers and, with the larger packages, free calls to other networks as well.
Cellphone users are using fewer voice minutes and more and more data, he said, and Telkom has used this to turn the conventional cellphone contract “on its head” by focusing on data rather than voice.
The packages are also cheap, according to Seeff, and especially for consumers looking for medium-to-high data use packages.
In my case, I need a new cellphone and have been long been an Apple user so have been leaning towards an iPhone 6. Using Tariffic’s comparison and based on my estimated monthly data usage and voice calls, Telkom’s FreeMe package, even though it includes a comparatively costly device, still comes out cheaper than comparable MTN, Cell C and Vodacom deals.
In a further analysis by Tariffic, based on three differing user profiles, and this time including different handsets, Telkom Mobile and its FreeMe packages again came out favourably — seven out of nine times (see graphic).
But Seeff cautioned that consum- ers must study the packages carefully and pick one based on their personal requirements.
Despite these disruptive offerings, Telkom is still a small mobile operator with only about 2.2-million subscribers, or 2.6% of market share, in the 2015 financial year, compared with the likes of Vodacom and MTN with 32.1-million (37.7%) and 30.5-million (35.9%) respectively, according to figures from Research ICT Africa (RIA).
Nevertheless, Telkom Mobile has “performed exceptionally well over the last two years”, RIA said in a recent policy brief.
It has reduced losses, begun offering high-value products and gained subscribers, particularly post-paid subscribers, faster than any other network. It also has the lowest and cheapest prepaid and data rates in the market, as well as the lowest outof-bundle rates.
But this has not managed to win it more subscribers, particularly in the prepaid market, RIA said, suggesting that it may be “facing brand and market positioning challenges”.
Seeff agreed, saying that many consumers “have unfortunately had a bad experience dealing with Telkom regarding their landlines and are simply not willing to give Telkom a second chance with their cellphone contracts”.
Some customers have also been burned by what they consider as “second tier” networks, preferring to stay with a network they trust, even at a price premium.
And this kind of product innovation is not the first seen on the market. Cell C has been doing it for years, Seeff said, offering promotions such as free WhatsApp usage, contract buyouts, and driving down prices in the market.
The larger players have been slow to respond to these and they have done