Competition in South Africa’s mobile market is set to increase as Telkom, previously an exclusively fixed-line operator, has finally confirmed that it is launching mobile services.
Operating under the brand “8ta”, Telkom’s services will launch with prepaid voice and data products, expanding to include postpaid products within a month of the service going live.
Jeffrey Hedberg, acting CEO of Telkom, said: "We are able to mobilise the reliability of fixed-line and the agility of mobile to provide products that South African people really want.”
Telkom held a 50% stake in Vodacom – the South African mobile market leader – until two years ago, and has been planning on launching mobile services since. The company has constructed 800 base stations, with plans to build a further 400 in the next six months.
While the operator will continue to construct its own infrastructure over the next five years (with a reported budget of ZAR 6 billion [US$880 million] set aside for this purpose), it currently has a network-sharing agreement with MTN that will provide its network with 96% coverage from launch.
The operator hopes to claim 15% of the mobile market in South Africa over the next five years – a lofty goal, but it plans on realising this ambition by using its existing infrastructure to offer potential customers package deals on mobile, data and fixed-line services.
While this initiative is unlikely to drastically undercut the current incumbents and begin a price war, it is expected to put the three current players – MTN, Cell C and Vodacom – on the defensive.
"[Telkom] will most likely get traction in the low-end market, which is price-sensitive. There is a lot of churn but that market accounts for 20 percent to 30 percent of the total mobile market”, said Andrew Kingston, a portfolio manager at Sanlam Investment Management.