Cell C's broadband conundrum
Over the last few years Cell C has changed its tune regarding broadband and their potential 3G/HSDPA plans. Cell C CEO Jeffery Hedberg initially said that ‘3G is hype and we won’t fall prey to hype’, but in August last year he announced that the company is reviewing its mobile data strategy.
“We’re in the process of reviewing our mobile data strategy. I can’t say much right now but we’ll make an announcement about next generation data products by year end [2008],” Hedberg told I-Net Bridge in a phone interview.
This deadline has come and gone without much information from Cell C. Recent attempts to get feedback from Cell C about its broadband and mobile data strategy proved fruitless. Unless this is failure from the company’s communications department it may well be a sign that Cell C is uncertain about their future plans for mobile data.
Cell C has lost many senior staff members over the last 24 months, including its CEO Hedberg who left the company with very short notice in March this year. These losses may influence the company’s strategic decisions, and coupled with massive debt it may not be easy to make bold moves in the mobile data market.
According to Brian Nielson, co-founder and director at BMI-TechKnowledge, Cell C has been under immense pressure to focus on the basics so as to turn the corner to profitability, under Jeff Hedberg.
“They cut back on capex, and believed that Edge would suffice for the majority of the customer base, which tends to be lower end customers. Vodacom has been particularly aggressive in ‘owning’ the 3G space, and MTN was forced to follow suit – willing to make a loss on data services initially so as to stimulated customer uptake, and Cell C probably realised it would be impossible to match this aggression,” said Nielson.
While Cell C may be rethinking its mobile data strategy, its competitors Vodacom and MTN are aggressively rolling out data services and signing up thousands of new subscribers monthly. Cell C has become somewhat irrelevant in the broadband market – losing out on potentially lucrative opportunities and making it harder for its partner company Virgin Mobile to have any impact on the high end market it is supposed to target.
Cell C’s mobile data offerings currently lag behind Vodacom and MTN in terms of bundle size, value for money and of course download and upload speeds. Providing high end data services can go a long way to lift Cell C’s average revenue per user (ARPU) which has declined by 20 percent over the last year.
According to Nielson, Cell C will have to ‘bite the bullet and roll out 3G/HSPA selectively, in areas where sufficient demand exists’ if they want to catch up with Vodacom and MTN. Nielson pointed out that a reciprocal roaming agreement with Telkom SA may also be an option. “Infrastructure sharing is becoming a major consideration for new operators and those with limited market share,” said Nielson.
Cell C’s focus on the lower end of the market may be a logical decision in the current local cellular environment, but without a comprehensive mobile data and broadband strategy the company may be setting itself up for problems in future.
Discuss Cell C’s Broadband conundrum
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