Virgin Mobile on track, says CEO
Virgin Mobile launched its mobile services across the country in June 2006, promising to ‘come to the rescue of South Africans’ and ‘bring competition to the market by offering South African customers a mobile phone service with great value, flexibility and high levels of service.’
The Virgin Mobile launch was accompanied by tremendous fanfare – and a customary Richard Branson high-adrenaline record attempt – but since then the company has struggled to gain traction in the local cellular market.
Over the last few years the company has seen leadership change hands a few times. Founding CEO Sajeed Sacranie left at the end of November 2006, and was replaced by Peter Boyd. Boyd in turn left the struggling company the following year, and was replaced by current CEO Steve Bailey.
Despite Virgin Mobile’s poor performance over the last few years and the uphill battle it faces to attract high customers, Bailey is upbeat about the future of the company and is confident that he is doing the right things to turn the company around.
One of the strategies which Bailey is implementing is creating a ‘lean and mean organization’. He has already reduced staff numbers from 450 to less than 200, and has cut overheads to around a third of what it was before he took over.
These changes mean lower operational costs and hence the ability to pass bigger savings to consumers. This is something which Bailey feels will give Virgin Mobile an edge over its competitors.
Virgin Mobile is already offering subscribers 1 000 free monthly SMSs, and the new CEO is planning to create more services which are simple and provide a higher value proposition than what is currently available in the market. Bailey added that he is keen to reduce rates for all calls from Virgin Mobile, and not just on-net or off-peak calls as is seen in the market today.
One of the biggest obstacles in reducing cellular call tariffs is the high interconnect rates, and Bailey said that he is very pleased that Government is aggressively dealing with what he describes as an ‘economic barrier’ to cutting costs.
So far Bailey’s strategy appears to be paying off. The company has doubled its postpaid subscriber base since the beginning of the year, and there are now around 230 000 active Virgin Mobile SIMs in the market. The company is also getting closer to being cash-flow positive and Bailey is hopeful that the company will move out of the red within the next twelve months.
Bailey is setting his sights on signing up 500 000 postpaid subscribers by mid-2011, and said that ‘simplified tariff structures, better value which customers understand and one rate across all networks’ will help Virgin Mobile get there.
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