Cell C CEO Alan Knott-Craig has delighted consumers with his aggressive mobile voice and data price cuts, but he has also come under fire from some observers for criticizing Vodacom for its high prices and high margins.
Knott-Craig is sometimes accused of not reducing prices and not fighting for lower interconnect rates when he was heading up Vodacom, with some people calling him a hypocrite and “two-faced” for now slating his former employer.
Knott-Craig explained that times have changed since his tenure as Vodacom CEO. He explained that when they started Vodacom in the early nineties the aim was to build a national mobile network and bring telephony to all South Africans.
At the time it was challenging to get loans from banks as a mobile operator, and they had to rely on money from investors (shareholders) which demand a good return on investment.
Knott-Craig said that he achieved what he set out to do at Vodacom when he left the company in 2008 – bringing telecoms services to nearly every household in South Africa and ensuring that the company’s shareholders received a good return on investment.
Times have changed
Knott-Craig explained that we are now in a new era of South Africa’s telecoms evolution, and since most people have access to telecoms services, the time has come to drop prices and make these services more affordable.
Shortly after Knott-Craig took over as Cell C CEO, he slashed pre-paid and contract voice and data prices. Cell C has also slashed international call rates to 99c per minute.
When Vodacom responded to Cell C’s international call rates by offering an 89c per minute promotion, but charging an opt-in rate of R5 per month to qualify for the lower rates, Knott-Craig slated the company: “You have screwed customers for long enough,” said Knott-Craig.
The Cell C CEO explained this criticism, saying that the time of very high margins and high prices should come to an end in South Africa because a high mobile penetration rate has been achieved, and that the initial shareholders have made the returns they needed.
Knott-Craig said that while shareholders should continue to get a return on investment, the massive margins (and very high prices) that local operators have become used to are no longer needed.
Knott-Craig added that consumers can expect even more from the company in future, which includes a better network, better services levels, and better prices.