http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.69Change: -0.05
R/$ = 12.32Change: -0.01
Au 1168.78 $/ozChange: -0.02
Pt 1083.00 $/ozChange: 1.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Jul 26, 2012

Cell C’s Knott-Craig shaking up SA mobile market

Back
Bloemfontein|Cape Town|Construction|Dubai|DURBAN|Engineering|Johannesburg|Port|Port Elizabeth|Pretoria|Africa|Building|Cell C.|Environment|System|Vodacom|Africa|South Africa|Mobile Operator|Service|Telecommunications|Telecommunications Industry|Alan Knott-Craig|Operations
Construction|Engineering|Port||Africa|Building|Environment|System||Africa||Service|||Operations
bloemfontein|cape-town|construction|dubai|durban|engineering|johannesburg|port|port-elizabeth|pretoria|africa-company|building|cell-c|environment|system|vodacom|africa|south-africa|mobile-operator|service|telecommunications|telecommunications-industry|alan-knottcraig|operations
© Reuse this



South Africa’s third-largest mobile operator Cell C’s aggressive refocus is setting the scene for the change new CEO Alan Knott-Craig wants to see in the industry.

Knott-Craig, who took the reigns three months ago, drastically cut local and international voice call rates and implemented simple and transparent tariffs in a country that held the seventy-third most expensive pricing structure globally.

The 60-year-old Knott-Craig stepped down as Vodacom CEO in 2008, after cofounding the group almost 20 years ago and guiding it to become the country’s leading telecommunications company.

In terms of pricing, the new Cell C head noted that the rest of the world “has moved on”. A three-and-a-half-year hiatus from the telecommunications industry has made him see the industry with “fresh eyes”, he told Engineering News Online, adding that consumers should not be paying the high prices currently offered by industry players.

He pointed to high mobile termination rates (MTRs) which result in it being cheaper to call internationally than call locally, as MTRs were cheaper in other countries.

Termination rates needed to decrease, Knott-Craig said, noting that many consumers were paying more than they thought as most were unaware of which network they were calling, owing to number portability, and whether the prices they were paying were on-net or off-net.

Initially R1.25 a minute in 2009/10, the MTR – as stipulated by the Independent Communications Authority of South Africa (Icasa) – has gradually dropped to the current peak rate of 56c a minute. Both peak and offpeak rates would be reduced to 40c a minute by March 2013. Off-peak MTRs were currently 52c a minute.

Icasa sought to balance the need to ensure fair consumer prices, promote competition and ensure a favourable investment environment.

Smaller mobile operators with less than 25% of the market share could charge an asymmetric rate 15% above the set rate between March 2012 and February 2013, and 10% above the set rate from March 2013.

The on-net/off-net pricing should be made flat as part of the process of simplifying and ensuring transparency in tariffs, Knott-Craig commented.

Despite earlier stating that the “basics” would be correctly established at the firm before embarking on any drastic changes, Knott-Craig launched, almost immediately, a price market shake-up, citing the need to maintain growth and increase revenues.

Cell C, which would soon have 50 countries listed on its 99c tariff plan, gained some traction in the market with the addition of over one-million new customers in a seven-week period after a new price was implemented, and it experienced a push into positive revenue territory as customers increased volumes and traffic.

This offset the group’s continuing network clean-up, which was removing all “dud” customers from the subscriber numbers.

Knott-Craig, delivering on his promise of ensuring the company was focused, with little bureaucracy and quick decision-making ability, kicked off a price-cut spree in May with postpaid, hybrid and prepaid rates dropping 34% to 99c a minute with per second billing locally, regardless of the network or time of day. This was further extended internationally over the following month and was expected to extend to over 50 countries in the near term.

“The company cannot fight back and gain its targeted 25% market share by doing the same thing tariff-wise,” he explained. “It just so happens that the way to fix this company is in the consumers’ interest,” he said, adding “it does not feel bad” that some good is the result.

Analysts previously commented that the group, which currently held a 15.4% market share with over eight-million customers on its network, would start to attract more low-income users on the back of a number of changes and price reductions on voice and data service at the company.

It was an easy thing to do, he added, believing that Cell C was perfectly positioned as it had “nothing to lose”.

Since his appointment, Knott-Craig has restructured its organisation, hired new employees, established six regional operations – with more expected by the end of the year – redesigned part of the network, worked on the billing system and embarked on building a good-quality voice and data network.

The network build was progressing well at 60% complete, with three to four base stations built a day, and was expected to be 100% complete within the next nine months.

Cell C currently covered about 93% of South Africa’s population and anticipated increasing this to 98% by year-end. Further, 90% of the mobile operators' traffic was now directed on Cell C’s own network with only 10% covered through a roaming agreement with Vodacom.

He stressed that restructuring the organisation, which “flattened” the organisational structure, has resulted in the same number of people employed at Cell C as when he started the process. Many people were relocated to regional offices in Bloemfontein, Port Elizabeth, Cape Town, Durban and Pretoria, where the operations were short-staffed. These regional operations also hired more staff. Some other employees were shifted to various different divisions, and many took the retrenchment packages offered by Cell C.

Since April, over 30 people from rival groups have joined Cell C, and while Knott-Craig welcomed and invited the skills, owing to a shortage in engineering skills, he was not approaching or poaching them.

Further, the group is set to move into a new, consolidated premises at developer Atterbury’s Waterfall Business Estate development, in Woodmead, Johannesburg, in December 2013.

July signalled the start of the construction of the 46 000 m2 head office campus, which would house, besides others, a customer walk-in centre, shops, offices, an IT centre and a warehouse, as well as run central and regional operations.

Waterfall Business Estate would become a 1.6-million m2 mixed-use commercial development.

A 15-year lease would also offer Cell C about 14 000 m2 of future development potential, which was expected to house distribution warehouses, shopping malls, fast food companies, offices and residential accommodation.

Cell C also landed a R1.5-billion equity investment earlier this year from its majority shareholder, Dubai-based Oger Telecom.

Oger Telecom holds a 60% direct shareholding in Cell C, as well as a 15% indirect shareholding through its wholly owned subsidiary, Lanun Securities. Black economic-empowerment partner CellSaf owns the remaining 25%.

While Knott-Craig noted that he has only been in the position for three months, people held high, sometimes unrealistic expectations, but he stressed that the many tasks ensuring the sustainability of a business takes time, including building a network, hiring people and optimising the network. He added that Cell C still had a long way to go, with a lot of work yet to be undertaken.
 

Edited by: Mariaan Webb
Creamer Media Senior Researcher and Deputy Editor Online
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
 
Latest News
An end to wage negotiations within the local government sector could be in sight as a conciliator’s proposal, setting out a number of settlement suggestions to resolve the deadlock, was expected on Monday. The Independent Municipal and Allied Trade Union (Imatu)...
Development financier Eastern Cape Development Corporation (ECDC) executive Noludwe Ncokazi on Friday said the organisation had the “huge responsibility of ensuring business continuity”, following the resignation of ECDC subsidiary Automotive Industry Development...
South Africa’s second-largest oil refinery, Engen Refinery (Enref), is set to undergo a three-day planned maintenance outage from July 9 as part of an ongoing maintenance programme to ensure that the facility, which delivers a significant portion of South Africa’s...
More
 
 
Recent Research Reports
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
Real Economy Insight: Automotive 2015 (PDF Report)
Creamer Media’s Real Economy Year Book comprises separate reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, gold, iron-ore and platinum sectors.
Real Economy Insight: Water 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Construction 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Electricity 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Road and Rail 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
 
 
 
 
 
This Week's Magazine
NHLANHLA NENE The main constraints to economic growth are domestic
Finance Minister Nhlanhla Nene earlier this month stated that, while South Africa’s 2015 economic growth target of 2% was achievable, it was not enough to deliver the tax revenue needed to combat the country’s challenges.
The World Steel Association has published the 2015 edition of the World Steel in Figures report, which shows an increase in steel production as well as provides an overview of steel industry activities from crude steel production to apparent steel use.
The 25-year master plan for Gauteng’s Aerotropolis project will go through a process of approval and adoption during June and July, says Aerotroplis project manager Jack van der Merwe. “We are also in the process of putting together a special purpose vehicle (SPV) to...
SOLAR PANELS The existing buildings in the Coega Industrial Development Zone lent themselves well to rooftop solar panel installations
The Coega Development Corporation (CDC) plans to fit 15 of its buildings, totalling 127 000 m2 of roof space, in the Coega Industrial Development Zone (IDZ), in the Eastern Cape, with solar panels.
The Supreme Court of Appeal’s (SCA’s) November 2014 judgment, ordering steel producer ArcelorMittal South Africa (AMSA) to hand over the 2003 Environmental Master Plan for its Vanderbijlpark steel plant to environmental pressure groups, confirmed the right of civil...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96