http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.09Change: -0.08
R/$ = 10.73Change: -0.05
Au 1268.65 $/ozChange: 3.78
Pt 1412.00 $/ozChange: 3.00
 
 
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 Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Aug 10, 2012

Knott-Craig shaking up SA’s mobile market

Back
Bloemfontein|Cape Town|Construction|Dubai|DURBAN|Engineering|Port|Port Elizabeth|Pretoria|Africa|Cell C.|System|Vodacom|Africa|South Africa|Building|Mobile Operator|Service|Telecommunications|Alan Knott-Craig
Construction|Engineering|Port||Africa|System||Africa||Building|Service||
bloemfontein|cape-town|construction|dubai|durban|engineering|port|port-elizabeth|pretoria|africa-company|cell-c|system|vodacom|africa|south-africa|building|mobile-operator|service|telecommunications|alan-knottcraig
© 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, 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 Com-munications Authority of South Africa (Icasa) – has gradually dropped to the current peak rate of 56c a minute. Both peak and off-peak 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.

T

he group is also set to move into a new, consolidated premises at developer Atterbury’s Waterfall Business Estate development, 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.

Cell C also landed a R1.5-billion equity investment earlier this year from its majority share- holder, 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 stressed that the many tasks ensuring the sustainability of a business would take 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: Creamer Media Reporter
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other News This Week News
South African State-owned defence industrial group Denel has announced its fourth consecutive year of profits. The group's results for the financial year 2013/2014 were recently announced at its head office in Centurion, south of Pretoria. Revenues grew by 17%, net...
There is little opportunity for JSE-listed infrastructure company Group Five to grow shareholder value in the domestic market, says CEO Mike Upton. He says value can still be found in the private sector, in the renewable and industrial power sector, as well as in...
The National Association of Automobile Manufacturers of South Africa (Naamsa) has announced the event dates of the 2015 Johannesburg International Motor Show (JIMS). The event will take place from October 14 to October 25, 2015, at the Johannesburg Expo Centre, Nasrec.
More
 
 
Latest News
Updated 3 minutes ago A research partnership has been launched in South Africa in a quest to make air transport more environmentally and economically sustainable. Hydrogen South Africa (HySA) Systems, the National Aerospace Centre and Airbus are working together on research into using...
Updated 42 minutes ago The South African National Roads Agency Limited (Sanral) will not make representations to the advisory panel on e-tolls and their socio-economic impact, it said on Tuesday. "No, Sanral will not be making representations," spokesperson Vusi Mona said in an e-mail to...
Despite various challenges related to the extraction of shale oil and gas, as countries grow accustomed to the idea, the use of shale as a form of energy will be more widely pursued, international oil and gas market analyst Michael Lynch said on Tuesday. Speaking at...
More
 
 
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
 
 
 
 
 
This Week's Magazine
South African State-owned defence industrial group Denel has announced its fourth consecutive year of profits. The group's results for the financial year 2013/2014 were recently announced at its head office in Centurion, south of Pretoria. Revenues grew by 17%, net...
There is little opportunity for JSE-listed infrastructure company Group Five to grow shareholder value in the domestic market, says CEO Mike Upton. He says value can still be found in the private sector, in the renewable and industrial power sector, as well as in...
The National Association of Automobile Manufacturers of South Africa (Naamsa) has announced the event dates of the 2015 Johannesburg International Motor Show (JIMS). The event will take place from October 14 to October 25, 2015, at the Johannesburg Expo Centre, Nasrec.
UK engineering support services provider Babcock is set to deliver the largest order of global truck manufacturer DAF’s truck tractors in Southern Africa to bulk carrier road-based logistics company Ngululu Bulk Carriers (NBC), with 133 trucks to be delivered in...
Digital radio communications in the African local government space can open up the world, but have many challenges to overcome, notes integration and migration of legacy radio communications infrastructure with digital mobile radio company Emcom Wireless head of...
 
 
 
 
 
 
 
 
 
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