{"id":52227,"date":"2012-06-12T11:48:12","date_gmt":"2012-06-12T09:48:12","guid":{"rendered":"http:\/\/mybroadband.co.za\/news\/?p=52227"},"modified":"2012-06-12T11:50:12","modified_gmt":"2012-06-12T09:50:12","slug":"cell-c-ceo-wouldnt-do-it-differently","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/cellular\/52227-cell-c-ceo-wouldnt-do-it-differently.html","title":{"rendered":"Cell C CEO wouldn’t do it differently"},"content":{"rendered":"

If Cell C<\/a> CEO Alan Knott Craig<\/a> had the opportunity to roll back the past two weeks and start the telecoms company\u2019s highly publicised retrenchment process all over again \u2013 he would do it exactly the same way.<\/p>\n

\u201cI am 60 years old and have never retrenched anyone in my life \u2013 to start now is not pleasant,\u201d he told a gathering at a Cape Town Press Club event last week. \u201cBut we couldn\u2019t have done it differently. If you want cheap telephony you can\u2019t have a bloated organisation.\u201d<\/p>\n

In the long run, he adds, cheaper voice and data costs will help generate more jobs than were lost.<\/p>\n

Knott-Craig joined Cell C almost three months ago after four years of retirement. \u201cWhen I left Vodacom<\/a> in 2008 I was literally sick and literally tired. I\u2019ve spent my time travelling South Africa. My ancestors have been here for 400 years but I had never travelled the country.\u201d<\/p>\n

After that, he concedes, he was bored. What to do? \u201cI couldn\u2019t go back to Vodacom.\u201d MTN<\/a> was too close to home, so he went to the smallest, and arguably the most entrepreneurial of SA\u2019s operators, Cell C.<\/p>\n

In a very short time he has introduced price reductions that the regulator has not managed in years.<\/p>\n

Time away from the industry opened his eyes to a few things. \u201cWhen you are in it sometimes you don\u2019t see the wood for the trees. There were things that could have been done and should\u2019ve been done.\u201d<\/p>\n

Costs were first on his radar screen. \u201cThe other operators have shareholders who have grown accustomed to fat dividends.\u00a0 Cell C has nothing to lose.\u201d<\/p>\n

First up was prepaid pricing. The pricing on prepaid phone calls was artificially set by the industry back in the mid-nineties. \u201cThe business model around the world was built around post-paid contracts. MTN, Telkom and our own shareholders were against the idea of a prepaid model.\u201d<\/p>\n

A compromise was reached. Prepaid billing would be allowed provided the tariff was set at a level that did not sabotage the contract business. The agreed rate was R3,60\/minute.\u00a0 At the time, in 1996, it was predicted that the potential size of the prepaid market was about 50\u00a0000 customers.<\/p>\n

\u201cNow there are five billion prepaid customers around the world \u2013 and we pioneered it.\u201d<\/p>\n

But once the price was set, it pretty much stayed put \u2013 falling marginally to about R2,70. As a result at least 50% of the prepaid market does not use their phone to make calls, he adds. They send sms\u2019s, \u2018please call me\u2019s\u2019 and receive calls \u2013 because it is too expensive to make calls.<\/p>\n

Cell C\u2019s objective was to set a price that recovers its operating costs, but which does not try to recover already sunk costs of the network infrastructure. It is also dead simple for users to understand. \u201cThere are no smoke and mirrors \u2013 no half price calls if you phone at this time or that time. It is 99c per minute flat fee \u2013 and we bill on a per second basis. That is very important.\u201d<\/p>\n

Cell C sold 2,1m starter packs in the first week.<\/p>\n

\"Alan<\/a>

Alan Knott-Craig<\/p><\/div>\n

Knott-Craig then turned his attention to international call charges. At R22\/m it is not surprising that no one uses this service \u2013 they use voice-over-IP. \u201cWe looked into our costs and realised it is cheaper for us to place a call to London than over the road.\u201d International calls to the UK, US, China, India and Pakistan \u2013 where the mobile termination rates are about US1c \u2013 are now 99c\/minute.<\/p>\n

The biggest cost in pricing a call, says Knott Craig is the mobile termination rate (MTR) \u2013 the\u00a0fees that the telecoms operators charge other players to carry calls onto their networks. \u201cThese rates are eight times higher in SA than they are anywhere else in the world.\u201d<\/p>\n

Intervention by telecoms regulator Icasa has seen MTRs fall from about R1,25\/minute to 40c next March. Knott-Craig believes they should fall further \u2013 to 25c\/minute, and possibly even lower than that.<\/p>\n

He has also tackled the established practice of bundling a contract with a cellphone. Cell C now offers contracts either with a phone or without a phone \u2013 and the contract duration can be as short as one month. \u201cIf you choose to take a phone with the contract the fees will be transparent \u2013 you will see exactly what you are paying for.\u201d<\/p>\n

Knott-Craig has always been confident, and driven. And his views haven\u2019t always been mainstream or popular. His is one of a few voices to support the Cabinet\u2019s decision to veto Korea Telecom\u2019s attempt to buy 20% of Telkom. \u201cTelkom has had foreign shareholders before, and that was not a pleasant experience for Telkom<\/a> or the country. Most of the other network operators are foreign owned to some extent.\u00a0Why anyone allowed the sale of an asset like Vodacom [to foreigners] is a mystery.\u00a0Government is right to be circumspect.\u201d<\/p>\n

This confidence was what kept him going during the tough years of building a business that many people did not believe in. And once again, he is building a business – not trying to win a popularity contest.<\/p>\n

Source: Moneyweb<\/a><\/p>\n

Related articles<\/strong><\/p>\n

Cell C puts cat among the pigeons<\/strong><\/a><\/p>\n

Cell C cutting up to 150 jobs<\/strong><\/a><\/p>\n

Cell C slashes international call costs<\/strong><\/a><\/p>\n

Cell C 99c for real: 2 million and counting<\/strong><\/a><\/p>\n

Cell C slashes prepaid voice and data prices<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

In the long run cheaper voice and data costs will help generate more jobs than were lost, says Alan Knott-Craig.<\/p>\n","protected":false},"author":23,"featured_media":41681,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"idle","_sma_x_autopost_error":"","_sma_x_post_id":"","_sma_x_attempts":0,"footnotes":""},"categories":[14],"tags":[681,355,35],"class_list":["post-52227","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cellular","tag-alan-knott-craig","tag-cell-c","tag-headline"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/52227"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/23"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=52227"}],"version-history":[{"count":1,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/52227\/revisions"}],"predecessor-version":[{"id":52415,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/52227\/revisions\/52415"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/41681"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=52227"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=52227"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=52227"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}