Telkom Mobile targets data

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Telkom Mobile managing director Attila Vitai says the new unit is a big leap forward for the groups strategy and he expects it to become the growth engine for Telkom. Photo: Supplied.

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The launch of Telkom Mobile could afford Telkom greater opportunities among corporate clientele and enable the group to extract efficiencies, analysts said yesterday, although some also questioned the change of strategy.

Telkom Mobile was expected to become the growth engine of the fixed-line and cellular operator and was a “big leap forward” for the group-wide convergence strategy, said Telkom Mobile managing director Attila Vitai, who was appointed last November to lead the division, which includes Telkom Business Mobile and 8ta.

But Chris Gilmour, an analyst at Absa Investments, said while it was sensible to extract efficiencies from Telkom’s infrastructure, the repositioning of the company’s mobile business was “bizarre”.

When 8ta was launched, large billboards and marketing created some awareness “but probably nothing like what they need to make inroads into their competitors’ markets”, Gilmour said.

“You take a brand like 8ta, do your homework and then keep punting it,” he added.

Jean-Pierre Verster, an analyst with 36One Asset Management, said Telkom still had a large chunk of its clientele in the corporate segment and higher end customers could be more inclined to adopt fixed-mobile convergence strategies.

He said the exercise would not be a game changer. “It’s more a marketing strategy than anything else.”

Vitai said: “Telkom Business will still grow but a substantial growth in Telkom will be mobile. The future of the group is data and the other will be to do with fibre [optic networks] to customers.”

Telkom Mobile would pander to “data hungry” customers who were high-volume voice callers while 8ta would remain geared towards the youth segment and mass market who tended to spend less.

The revised strategy was leaked two weeks ago following a staff announcement and mixed messages from Telkom about the continuance of the 8ta brand. The rebranding of the unit as a sub-brand under Telkom Mobile is affirmation that the brand has not taken off as well as the company initially expected.

Just over two years after spending millions to advertise and launch 8ta, which has not yet turned its first profit, Telkom believes it has happened on a winning strategy to increase its share in a competitive cellphone market.

Vitai declined to reveal the new products and services that would be launched today but he said Telkom Mobile boasted 100MHz of spectrum, which was substantially more than its competitors, and had a vast high-speed network including the bundling of fixed-line and cellular offerings.

He said the tariffs would be very aggressive and attractive and it was targeting both high- and low-income consumers.

“I believe we have come of age. When we launched we didn’t have services, people and the experience in this game. We didn’t position the brand in [market segments] that were likely to give us significant revenues,” Vitai said.

“There is a significant core group of consumers who expect to be able to do more with their devices in their own time and on their own terms. They know a lot about mobile products and are getting better at understanding complex deals and associated terms and conditions.”