Telkom has returned to the drawing board to restructure elements of its cellular arm, 8ta, which it thought would be a formidable game changer in the local telecoms industry.
The fixed-line operator first told 8ta staff on Friday that Telkom would “progressively change the 8ta brand to Telkom Mobile”.
On Saturday Telkom said in a statement that “elements of the market which had been serviced and marketed under the 8ta brand, will soon be serviced under the Telkom brand”.
The move comes at a time when President Jacob Zuma’s cabinet is due to make final deliberations and sign off on a plan for the state-controlled group’s future, and chief executive Nombulelo Moholi is preparing to step down. The government is a controlling shareholder in Telkom.
In recent months Telkom was rumoured to be preparing to sell 8ta to a buyer who could be Cell C’s wealthy Arab owners. At the time, Telkom said it had received no offer and it did not comment on speculation.
8ta was launched in 2010 with a flashy marketing campaign and great fanfare at a ceremony where Moholi said the company was destined to become a market “disruptor”.
The latest exercise underscores what analysts believed from the beginning, that the loss-making 8ta would struggle as a late entrant in a market with three entrenched players.
8ta has managed to distinguish itself in data, with low price, high volume deals, more than in the voice market.
In the six months to last September 8ta’s financial profile improved. It reported a loss of R587 million compared with a loss of R1.066 billion a year earlier. Subscribers grew 52.4 percent to 1.1 million.
Telkom said it would not discontinue the 8ta brand, which had been successful in the youth market. New propositions would be developed and launched under 8ta, with details communicated “in due course”.
The realignment would support a group strategy of providing converged fixed and mobile offerings and a “more effective business with stronger commercial prospects”, it added.
Analysts have welcomed the change, which they say dispels rumours that 8ta will be sold.
Arthur Goldstuck, an analyst whose website Gadget broke the story on Friday, said that 8ta would be “far more comfortably marketed” under the Telkom Mobile brand.
“There’s a greater sense of value if they are perceived as a division of Telkom rather than a start-up,” Goldstuck said.
He attributed 8ta’s lacklustre performance to the appeal of the branding to younger users who tended to spend less.
Frost &Sullivan consulting manager Ian Duvenage said Telkom, although not often well regarded, had “a lot” of brand equity and its convergence strategy was “in line with global trends”. The shares fell 1.64 percent to R14.95 on Friday.