8.ta's senior managing executive Amith Maharaj.Photo Supplied 8.ta's senior managing executive Amith Maharaj.Photo Supplied
Asha Speckman
Telkom’s cellphone company 8.ta is preparing to launch a new prepaid product within the next two to three months, according to Amith Maharaj, the senior managing executive for Telkom Mobile.
The start-up joins its peers, particularly Vodacom, that have vigorously altered pricing after Cell C, the country’s third cellphone network operator, dropped prepaid voice tariffs to 99c a minute in May.
But Maharaj was adamant that his company’s product was not a direct response to the competition and he would not reveal the nature of the anticipated offering.
The operator has not yet managed to disrupt the voice market. It has 1.4 million revenue-generating customers, of which 1 million were prepaid customers and about 444 000 were contract clients.
He said unlike other emerging markets, South Africans did not understand the nuances of voice product pricing and were more orientated to “freebies”.
The company was gunning for a share of the data market and set a deliberate data-centric strategy. It launched products such as 120 gigabytes for R1 800, a range of data plans for the iPad tablet, and a BlackBerry data and e-mail plan for R30.
It would spend between R2 billion and R2.5bn to bring its base stations up to 4 700. By May, 51 percent of 8.ta’s voice customers and 85 percent of data customers were roaming on 8.ta’s network and not MTN’s as per a roaming agreement between the parties.
“Next year is quite a big year for us in terms of how we plan to do data. Some competitors may have changed in the short term, but we will appeal to people who are looking for value,” Maharaj said last week.
The company launched its services in October 2010 with the odds stacked against it.
Vodacom and MTN were successfully plying the market for more than a decade and Cell C was playing catch-up.
Spiwe Chireka, the International Data Corporation’s programme manager for telecoms in Africa, said 8.ta should focus on cost efficiencies, following Cell C’s example.
She said opportunities for 8.ta abounded in the enterprise segment although companies were less likely to sign up for cellphone contracts for employees. The trend of employees bringing their own device to work had become a challenge for cellphone operators.
“It means 8.ta needs to have good consumer penetration so that consumers start to push (8.ta) into the enterprise,” Chireka said.
Maharaj said 8.ta would be profitable by 2017. A focus for the 2013 financial year was to reduce earnings losses by at least 20 percent.
The initial challenges of distributing 8.ta’s products had improved during the last six months. Maharaj also said in most areas, the company had worked with partners to offer commercial deals to spaza shop owners, but did not provide details for competition reasons.
He said so far, about 30 000 spaza shops countrywide were 8.ta branded. “We’re catching up on 17 or 18 years of distribution that our competitors have. In the last six months, we’ve seen a significant improvement.
“The engagements that we are starting to have are becoming fruitful. We are starting to find our feet,” Maharaj said.
Telkom shares closed 3.12 percent lower at R18.30 on the JSE yesterday.