ADSL, 3G on the same bill mean savings of 20%

Telkom is finally playing to its strengths. The launch of three fixed-mobile packages for business customers, with more than two dozen packages on the way, will have a significant impact on the market.

No one else can offer a fixed voice service, a mobile contract, ADSL and 3G data on a single bill from a single provider. A fortnight ago, new CEO Nombulelo “Pinky” Moholi committed to launching fixed-mobile bundles in the business and consumer markets during the 2013 financial year. But, these promises aren’t new.

In the past five years, we’ve heard nothing but assurances from Moholi’s predecessors: Reuben September and Papi Molotsane. It will focus on “fixed-mobile convergence”, we were told. “Convergence is the future.”

At last, Telkom is delivering. This (along with many other decisions made in the past 12 months) proves that Moholi is the best-suited person to lead the group, and speaks volumes about the turnaround that is being achieved. Fixing Telkom was never going to be an easy task. So many moving parts, so many stakeholders (I hate that word), 20 000-odd employees, so many competitive threats…

Right now, the three (and soon to be 20-odd) convergence packages are for Telkom Business customers only.

But they give us a great indication of what’s in store for Telkom residential customers.

Take its Advanced DataDeal 1, for example. R469 per month gets you 10GB of fixed (ADSL) data, 10GB of mobile (3G) data, free website hosting (including domain and e-mail), as well as a free DSL router and 3G dongle. Add standard business line rental (R191.84) to this, and you have a monthly bill of R660.84 (excluding calls).

If you buy these services separately, it would cost your business around R980 per month, and a one-off R200 SIM and connection fee for the 3G service. Not a massive saving (33%), but a start.

Its Advanced VoiceDeal 2 with a fixed voice service (including 150 free minutes) and a BlackBerry mobile contract (also with bundled minutes) costs R499 per month. Buying these two services separately will cost 6% more. But it gives you free mobile calls for 24 months to a single fixed Telkom number which means you could call your business for free (a very useful addition).

Telkom says these converged bundles or packages could mean savings of around 20%. This amount is going to vary from deal to deal. Some may mean a bigger saving, others a 5% saving. But, the fixed-mobile converged services mean a single package on a single bill from a single account manager at a single provider. That alone is worth it.

The 20-odd bundles which are going to launch for businesses in the coming weeks are going to surely force businesses (especially SMMEs!) to look at their monthly telecommunications spend and consolidate it.

Brian Armstrong

For large enterprises, it’s going to offer what Telkom Business MD Brian Armstrong calls “closed used group deals” with up to 20 000 mobile users. Its also piloting “unified communications” solutions with three large corporates which will no doubt help it maintain its market leadership position in the enterprise space.

Its made tentative steps in offering converged services in the consumer space. Telkom Mix, as an example, offers a BlackBerry contract, bundled mobile airtime, a landline and free evening and weekend calls (essentially the entry-level Closer calling plan) for R299 per month.

Compare this to separate products, and the saving is obvious. There’s R250 8ta airtime per month, BlackBerry Internet Service (R59 a month) and you’re already ahead of the R299 bundled price. You’re practically receiving a BlackBerry Curve 8520 handset, residential line rental (normally R139.97 per month) and evening and weekend calls for free. That’s 33% less and a free mobile phone.

The bundled converged products are taking longer to get to the market than Moholi and Telkom wants. But its spiderweb of back-office systems (multiple order, CRM, billing systems) mean it is not that simple.

But its overhauling these (th of the 5 systems are underway) and its about to commence with the remaining two. These are “major, major transformations” says Moholi. And she’s not understating the enormity and complexity of the task. By early next year, the back-office transformation will be complete.

With this in place, converged products will be the norm, not the exception.

Let the avalanche begin!

Business customers win. Consumers win.

*Hilton Tarrant contributes to “Broadband”, a column on Moneyweb covering the ICT sector in South Africa. With real converged products, Vodacom, MTN, Cell C and Neotel are going to find much, much stronger competition from the “incumbent”.

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