Telkom 'may lose market share'

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Telkom 'may lose market share'

13/01/2006 13:53 PM
By: Shoks Mzolo

Pretoria - With the advent of factors such as the fixed-line second national operator (SNO), municipality networks and voice over Internet Protocol (VoIP) set to change the telecommunications landscape, Telkom (TKG) has factored in a loss of up to 15% in market share over the next five years, company CEO Papi Molotsane told I-Net Bridge.

However, Molotsane said in an interview that the loss of market share would not necessarily result in reduced revenues.

The fixed-line monopoly would defend its revenues by putting in place a "dual approach" - a plan that focuses on both customer retention and customer acquisition.

For the half-year ended last September, the dual-listed phone group's profit increased to R7.517bn from R5.474bn in 2004 while operating revenue grew 9.9% to R23.456bn of which R5.510bn or 13% was generated by the data business.

Molotsane acknowledged a decline in voice business revenue streams, but said the group would grow revenues from its data business to 50% in the future.

TV services

To achieve this, Telkom would look at providing TV services through its network - or IP TV - and the lucrative network management opportunities such as the R1.8bn outsourcing deal signed by Telkom and Computer Science Corporation with Nedbank (NED) and Old Mutual (OML) last year.

"Voice is becoming a commodity, we can't rely on it and there are people who are saying it must be free in the next few years," he said.

The plan to lure customers away from rivals, once implemented, could see Telkom becoming user-centric in a bid to limit market share losses when the SNO finally gets off the ground possibly during the second half of 2006.

"Undoubtedly the issue of competition is going to have an impact on our business. Typically telcos around the world facing competition are susceptible to competitors coming in," he said.

He added that when faced with liberalisation and competition, incumbent operators lose market share.

"We've actually put in our projection at 10% to 15% loss of market share moving forward - within five years," he said.

"What is important for us to do is to have a dual approach to look at what to do to protect our revenue but also, secondly, to look at how to increase our revenue."

'Delight your customers'

"Protecting our revenue comes from the perspective of keeping your customers - but to do this you've got to delight your customers, making sure that they are given innovative products that would excite them, give them more functionality and that they are delighted with the kind of service you provide them.

"You have got to make sure that they feel and believe that you are adding value and not just giving them service," Molotsane continued.

Meanwhile, the SNO has remained mum on how it would attract clients and was not commenting on its strategy in a market where Telkom has entrenched itself as a dominant player.
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http://www.fin24.co.za/articles/default/display_article.asp?Nav=ns&ArticleID=1518-24_1862625

"Protecting our revenue comes from the perspective of keeping your customers - but to do this you've got to delight your customers, making sure that they are given innovative products that would excite them, give them more functionality and that they are delighted with the kind of service you provide them.
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You forgot to mention at a reasonable (affordable) cost too.

Right now you are so far off the mark with any of the above it is almost incomprehensible.
 
They're going to start using a 'dual approach' NOW?? A company should ALWAYS aim to please current customers, as well as to provide great offers to acquire new customers!
 
<Q>Molotsane acknowledged a decline in voice business revenue streams, but said the group would grow revenues from its data business to 50% in the future.</Q>

Hence the refusal to drop the cost of ADSL - despite their previous economies of scale promise. Grrrrrrrrr.
 
However, Molotsane said in an interview that the loss of market share would not necessarily result in reduced revenues
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This is what he probably meant by "dual approach"

1. Increase prices even more (i'd wager a 15% price hike every year to compensate for the lost market share)
2. Decrease service/maintenance costs by ..well...not delivering any service at all. Possibly
retrenching another 15% of the workforce every year.
 
Meanwhile, the SNO has remained mum on how it would attract clients and was not commenting on its strategy in a market where Telkom has entrenched itself as a dominant player.
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Im beginning to wonder if SNO is ever going to actually say anything...
 
ShaunSA said:
Im beginning to wonder if SNO is ever going to actually say anything...
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No need - Every time a Telkom employee opens their mouth, the SNO gains market share.
 
"...a plan that focuses on both customer retention and customer acquisition
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Customer retention - LOL. Telkom you're going to have a hard time with this, your only saving grace would be to force your exhorbitant prices inline with global trends!

Customer acquisition - same strategy
 
Question: How does Telkom calculate it'll loose 10-15%? I mean what calculation is that or is this just an arrogant PR statement (oh we're planning on only loosing 10-15% from competition)?!
 
Peter7 said:
Customer retention - LOL.
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More like customer TENSION.. you should see some of the mails people send through, there are many, many unhappy customers out there.
 
"We've actually put in our projection at 10% to 15% loss of market share moving forward - within five years," he said.

Optimnistic bugger eh? Either that or it's a typo and he meant 100% to 150%. Well maybe the 15% could be 100% of the internet users ditching them for the SNO
 
Telkom 'may lose market share'
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er...isn't this just stating the obvious. There was no competition, thus market share = 100%. Now there is competition thus market share < 100%.

This reminds of those brilliant soccer commentators:
"Well, it was a game of two halves"
"Well I think Manchester will want to score a goal now"
"Liverpool are 1-0 down, if they don't score a goal, they're going to lose this match."

I hate people that state the obvious as though it was *profound*.

"It's always in the last place you look" - Well yeah, of course it is, 'cos you stop looking when you find it, @sshole..
"Winners know when to stop" - er, well if they didn't, they'd be losers you stupid git.
 
To achieve this, Telkom would look at providing TV services through its network - or IP TV -
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ROFLOL - oh right - in 3 gigs a month - I look forward to smaller bills :rolleyes:

can't help compare telkoms attitude to BT's - off my post here:http://mybroadband.co.za/vb/showthread.php?t=35185

Our position remains that a strategic and flexible regulatory regime, together with rapid deregulation wherever possible, is vital to meeting customers’ developing needs and creating the conditions in which we, and others, can continue to invest with confidence.
--
It is increasingly important that companies such as BT continue to be good corporate citizens, living up to our responsibilities to the communities in which we operate and to the environment.
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:rolleyes:
 
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