Johannesburg - Telkom’s shares leapt almost 3 percent on Friday as investors welcomed the announcement by South Africa’s biggest landline phone carrier of “FreeMe”, a set of aggressively priced, data-focused mobile packages.
Leading technology and telecoms analysts said on Friday that the mobile data cat was well and truly out of the bag and the days of confusing, customer-unfriendly cellular packages designed around voice and SMS messages were numbered.
Available from today to both contract and pre-paid customers, they all come with free on-network calls, free calls and messaging over WhatsApp, BBM, and Viber, as well as 50 free SMS messages per day.
“This is a game changer,” said Arthur Goldstuck, the managing director of technology research company World Wide Worx.
“In launching these packages, Telkom is the first network operator to acknowledge the reality that data is rapidly becoming more important than voice.”
Steven Ambrose, the chief executive of Strategy Worx Consulting, concurred. “Until now, the approach from networks has been: 'Here’s x number of minutes and y number of SMS messages. Oh, and we’ll tack z amount of data on the bottom.’
“Telkom’s new packages cleverly turn this outdated model on its head, putting data front and centre where it belongs. Things will never be the same again.”
Ambrose predicted that it would not be long before other networks responded with similarly data-centric packages.
The market has been even quicker to react. On Friday, Bloomberg reported that cellphone services provider Blue Label had dropped as much as 5.9 percent, closing 3.95 percent lower at R18.49 in Johannesburg. And Blue Label is not the only company likely to be affected.
Michele Santangelo, a money manager at Vunani Private Clients, said Telkom’s new packages “are going to put some pressure on all the other providers”, particularly Cell C.
“Blue Label is quite involved with Cell C. This might put Cell C (under) further pressure in terms of margins and client retention. Cell C is already in a precarious position, so now there could be further price pressures and competition. It might put a little pressure on Blue Label in the short term,” Santangelo added.
Announcing the new packages on Thursday night, Telkom’s chief executive for consumer and small business, Attila Vitai, said it flew in the face of years of mobile industry tradition, where customers had to navigate confusing contracts, seemingly endless (terms and conditions), high peak rates and pricey extras, by prioritising simplicity, ease of use and value.
“Telkom FreeMe offers our customers smartphone plans that liberate them from everything they’ve ever hated about their network. Data has become the central requirement for most smartphone users, so that is what we have prioritised,” Vitai said.
Ambrose said the announcement marked another significant milestone in the company’s evolution from “lumbering parastatal to nimble telco”, a process that had speeded up significantly since chief executive Sipho Maseko took the helm in April 2013.
Goldstuck likened Maseko’s approach to that taken by former First National Bank (FNB) chief executive Michael Jordaan, whom he credited with introducing an entrepreneurial mindset at the bank.
“Maseko has taken a similar approach at Telkom. He’s brought in some really creative thinkers. Divisions like Openserve, Telkom Mobile, Telkom Business are all highly entrepreneurial.
“These things pick up a momentum of their own. FNB continues to operate in this entrepreneurial fashion under Jacques Celliers. And Telkom looks like it’s building up an equally impressive head of steam,” Goldstuck said.
Telkom shares had gained 2.81 percent on Friday on the JSE to close at R66.31.
BUSINESS REPORT