Newly appointed Virgin Mobile SA CEO Peter Boyd says the company has no plans to backtrack on its controversial decision not to provide “free” handsets, a lucrative practice whereby mobile operators lock consumers into two-year contracts in return for subsidised handsets.
“We’ve got some competitive products in the market right now. Some offer better value than free handsets,” he says.
Boyd says the key to Virgin Mobile’s success in SA is for the company to make consumers understand what its products offer them. “We could do a better job of making our value proposition more obvious to the consumer, but I don’t think we have to resort to saying something is free when it’s not.”
Virgin Mobile, a joint venture between Cell C and Richard Branson’s Virgin Group, has got off to a slow start since its SA launch in June last year.
“We need to serve the consumer better than the other guys and become the famous name that we should have in this market,” says Boyd.
Boyd — who worked in SA 10 years ago for McKinsey & Co, consulting to Business Against Crime — has ruled out drastic changes to the company’s strategy. This is in spite of the turmoil amid which Boyd’s predecessor, Sajeed Sacranie, left suddenly last November.
Sacranie, who established Virgin Mobile in SA, left amid dissatisfaction voiced by the company’s shareholders about its performance, and talk of unhappiness among some staff about his management style.
But, says the Scottish-born Boyd, whose previous job was as vice-president for marketing at Virgin Mobile in the US: “This company has done an awful lot right in terms of getting a service provider up and launched in SA in the short time that it has.”
Boyd won’t disclose Virgin Mobile SA’s subscriber numbers or its average revenue per user (a key industry measure that determines profitability), but he says the company has benefited from the introduction of mobile number portability, which allows cellular subscribers to switch networks and service providers without losing their numbers.
He also says the market is still far from saturated, despite continued growth by market leaders Vodacom and MTN, which together claim to have more than 32m SA customers.
“There are still people out there who need to get a cellphone for the first time,” he says. “There is growth, in general, across the spectrum. And there’s also an opportunity in switching customers [to Virgin Mobile SA].”
New advertising campaigns are likely. The company has asked advertising agencies to pitch for its business. Five, including its current agency, Morris Jones, are in the running. The contract, the value of which has not been disclosed, should be awarded soon.