Getting Closer
However, chief sales and marketing officer Wally Beelders – the man tasked with stemming the decline in Telkom’s fixed line revenue through innovative products – is more than quietly confident.
Beelders is revelling in the success of Telkom’s range of Closer packages. They bundle together discounted voice and Internet and are already proving to be its most successful fixed-line product range ever launched, with 12% penetration of the post-paid user base in just one year (roughly 229 000 subscribers). It’s aiming to convert 50% of its post-paid fixed line customer base – around 1m lines – to one of the Closer packages within five years of launch.
Telkom sees its Closer packages as the glue aimed at making its customers stick to the blue brand for their fixed line needs rather than migrate to the orange – Neotel. Most Closer subscribers aren’t new customers but have migrated from being normal pre-paid Telkom users to one of its plans.
Beelders says Telkom isn’t scared to see a flood of its customers to Neotel. Though it anticipates an innovative offering from the new operator in order to differentiate itself, Telkom doesn’t believe Neotel will be able to compete with it on price. Beelders says Telkom’s looking forward to customers being able to compare it to another fixed line operator rather than use unrealistic comparisons to countries such as China, which has monstrous economies of scale.
In November last year, Telkom launched two additional Closer plans on top of the three it first offered in December 2005. Plans 4 and 5 bring broadband into its mix, and Beelders says while December is always a quiet time for fixed line business, the uptake of Plan 4 has been good so far.
The only thing Beelders can’t yet guarantee is that it will be able to provide an ADSL line in what customers could consider a reasonable time frame.
In a refreshingly frank manner, Beelders conceded that it’s probably meeting the expectations of most customers, its broadband prices are relatively still too high and that it had sweated its assets for too long under its previous shareholders (specifically the Thintana consortium, which owned 30%).
However, Beelders says Telkom is moving in the right direction. And its new strategy is to sell reality to customers – in other words, it will tell the truth about how long it expects to take to fulfil an ADSL order. Though current rollout times aren’t acceptable, Telkom has to be realistic about the current situation and is doing much to rectify that going forward.
It will be easier in the future to provide services in a shorter time-frame than it is currently, says Beelders – after Telkom has invested in shortening the local loop and pre-provisioning its network. As penetration increased, prices would come down.
At least Telkom isn’t going to be alone on that score, Beelders says. No other operators will have a pre-provisioned network enabling them to roll out really high speed broadband quickly. Though the addition of WiMax – from April this year – will alleviate the problem to some extent, Beelders says wireless won’t give you the capability for IPTV and other value added services.
So far, Telkom says it has seen "very little" of Neotel in the marketplace since the launch of its wholesale international services. However, it concedes to having lost one or two competitive bids on a price-specific basis – though not on an outsourced solution basis, says Beelders.
Beelders says Telkom has a number of other bundled offerings planned and will release those when needed in response to Neotel’s offerings. An international offering would seem to be a logical add-on, as would other value-added services, such as IPTV and video on demand, in the future. He says it has the billing system and other processes lined up to immediately cope with new product launches. "All those bullets are loaded," Beelders says.
Clues to Neotel’s consumer offering
NEOTEL says on its website that it will deliver "basic voice and Internet services" – with a choice of voice only or Internet only – as well as bundled voice and Internet (including broadband) services. It will use a combination of fixed line (copper and DSL) and wireless (WiMax) for last mile delivery, but says securing the 800MHz spectrum is key if consumers are to benefit from high-speed technologies such as CDMA.
Finweek
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