The South African telecommunications giant has begun the long and ardous process of moving away from reliance on voice calls and line rental fees, and is actively moving to reposition itself as a kingpin amongst data vendors.
That move might seem an unlikely one; Telkom’s backbone is built atop telecommunication infrastructure – so much so that it exerts a stranglehold upon a majority of ADSL providers within the country.
However, that’s set to fall away. Telkom’s CEO, Sipho Maseko, recently confirmed that the firm would axe its line-rental fee in the near future as the company migrates to secure a foothold in the mobile data market. For investors, that will come as a welcome relief; the company is caught in the midst of change in the South African market as data consumption looks to oust the quantity of calls made across the country. Telkom itself recently suffered a loss of over 20,000 fixed-line subscribers; its largest decline since 2001.
To that end, then, the company is set to rely on its own competitor to the likes of Vodacom, Cell C, and MTN in the form of Telkom Mobile. Its first offensive offering – the FreeMe plan – is an all-out assault on its rivals.
The FreeMe plan is a sizeable move made to undercut the largest South African mobile networks; the plan offers six tiers and culminates in one of the most affordable ‘uncapped’ offerings yet seen across the mobile data market.
The FreeMe plan offers various amounts of data per package, but offers free instant messaging calls on clients such as WhatsApp, BBM, and Viber as well as 50 free SMSes per day. In an interview with TechCentral, Telkom’s CEO for consumer and small business, Attilla Vitai, stated that zero-rated (free) Skype and FaceTime calls would follow at a later stage.
The plan opens at R99 for 1GB of mobile data, and follows upward for R149 for 2GB, R299 for 5GB, R399 for 10GB, R599 for 20GB, while the unlimited package would retail for R999. However, the final two packages are met with a fair usage policy of 1500 minutes per month and 3000 minutes per month respectively. The unlimited and 20GB offering features free calls to other South African networks, while the remaining offerings opt for free calls to other Telkom Mobile and landline numbers. An out-of-bundle rate for voice at R0.69 per minute (per-second billing), text at R0.30 (160 characters), MMS at R0.50 (300KB) and data at R0.29 per MB applies across the board.
Speaking on the Telkom’s decision to focus on data, CEO Sipho Maseko stated that “What we realise(d) is that our customers use voice less, and use data a lot more…This means that true convergence between fixed and mobile services will start to come through”.
Telkom clarified that its offering was provided for after “re-farming” (re-allocating) its radio frequency in the 1,8Ghz band. This effectively reduces the networks dependency on 2G networking, and allocates the space for 4G and LTE service instead.
Further, the company clarified that the plan would work should users roam off of Telkom Mobile’s network, where users will be placed on MTN and would benefit from a 2G connection.
Telkom’s aggressive data strategy effectively undercuts what a majority of its rivals have been willing to do; focus on offering zero-rated services such as WhatsApp and BBM. While Vodacom and MTN have campaigned for the regulation of WhatsApp in South Africa – citing their inability to draw income from the over-the-top service, Cell C have comparatively played the ‘good samaritan’ card, offering WhatsApp services for a fee of R7.50.
Vodacom, MTN, and Cell C – having been built of the back of voice services – will need to pivot to offer competitive data offerings. With the proliferation of smartphones thanks to the affordable offerings many Android smartphones provide – and the fact that WhatsApp in particular will officially leave older platforms such as Symbian and BlackBerry 10 behind – that move is likely to only proceed on an upward trajectory.