| By Andre Wills of BMI
TechKnowledge SA All
is not safe for the incumbent cellular operators. There exists a real opportunity for the
entry of a third operator to the South African mobile market. But where are the
opportunities, and who will use a new operator?
BMI-TechKnowledge has just published the first in-depth
study of the mobile market in South Africa "3rd Cellular Operator
Opportunities in South Africa". This report, based on over 2500 interviews with
current and potential cellular subscribers, shows not only where these opportunities are
but how they can be unlocked.
Defining the opportunity
The opportunity is rather complex, not nearly as straightforward as when MTN and
Vodacom launched their respective networks in 1994. We found that the opportunity is
defined by five parameters:
- Quality
- Price
- Coverage
- Value added services
- Technology platform
The research showed that there is no one single value proposition that meets the needs
of the business, the personal contract, the prepaid and the potential subscribers. A
different mix of the parameters that make up the value proposition is required to address
the needs of the different market segments.
For example: Affordability has always been a market issue but with the growth and
challenge of penetrating the mass market, affordability has become even more important.
Potential subscribers are prepared to trade national coverage for lower tariffs while in
general a business subscriber is less likely to make this trade. Some 44% of potential
subscribers indicated that they would choose regional coverage at lower tariffs compared
to national coverage at the existing tariffs. Businesses want national coverage and in
general are prepared to pay higher tariffs. Only 29% of businesses would select regional
coverage at lower tariffs.
Will existing customers switch?
We have analysed the customer base of the existing cellular operators by defining
whether a subscriber is loyal, indifferent or likely to switch.
- Loyal – defined as customers who indicated that they will not switch to a new
operator
- Indifferent – defined as customers who are indifferent about who their network
operator is
- Switch – defined as customers who most likely will switch to the new operator
The overall "rule of thumb" we developed was that 35% of existing subscribers
should remain loyal to the existing network operators while 20% indicated that they would
most likely switch. Some 45% of subscribers are indifferent about their network operator!
Understanding why there exists this large indifferent customer group is key to both the
existing network operators and the new entrant. The existing network operators have the
advantage within this customer group, as the new entrant needs to demonstrate through
their value proposition to this group why they should switch to the new operator.
We expect to see more innovative offering emerge from the existing network operators
targeted at this group to keep them on the existing network.
Subscriber growth
Is there significant growth left in the market? Yes! By the end of 1998 there were 2.3
million net subscribers and the growth from 1997 to 1998 was dominated by prepaid service,
which grew by 161%. We estimate that the market should reach 3.2 million net subscribers
by the end of 1999 and some 5-6 million subscribes by 2004.
Currently the market is worth R7 to R8 billion and this will grow to around R15
billion by 2004.
The report
I only gave you a taste of what's in our 200-page report. Trying to convey all the
findings would lead me to writing some 10 pages.
Please e-mail me
should you wish to find out more about the 3rd Cellular Operator Opportunities
in South Africa. |
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