Telkom's 8ta Service Aiming for 15% of South Africa's Mobile Phone Market

Telkom South Africa Ltd., Africa’s largest fixed-line phone company, aims to capture 15 percent of South Africa’s mobile-phone market in five years after its wireless service starts on Oct. 18.

Telkom’s 8ta mobile unit will seek clients among the company’s 4.3 million fixed-line users, of which 2.1 million are businesses, Amith Maharaj, the division’s managing executive, said in an interview in Johannesburg today.

The company’s mobile offering has been in development for two years and is part of its strategy to offset the fixed-line business’s falling revenue and market share. Telkom’s voice traffic fell 9.3 percent in the year ended March 31 because of competition from fixed-line rivals and wireless services.

8ta’s call charges will be about 60 percent lower than the average rates South African mobile-phone users now pay, Maharaj said. Customers will earn free air time by receiving calls, and 50 free text messages for the rest of the day after sending at least five messages, Maharaj said.

“We are targeting as many users as possible,” he said, adding Telkom wants users to talk more on the phone. South Africa has an average of 90 minutes of monthly use per client, compared with 160 minutes in Chile and 190 minutes in Turkey, countries with similar levels of gross domestic product per capita, he said.

Telkom is spending 6 billion rand ($880 million) on building its mobile network. It has constructed 800 base stations and plans 3,200 more. It has a national roaming agreement with MTN Group Ltd., Africa’s largest mobile phone operator.

Telkom will be the fourth mobile operator in South Africa and will compete with MTN, Vodacom Group Ltd., the largest provider of mobile phone services to South Africans, and Cell C Ltd., which is the third-largest operator. Telkom previously owned a 50 percent stake in Vodacom, which it disposed of through a sale and spinoff.

To contact the reporter on this story: Nicky Smith in Johannesburg at nsmith38@bloomberg.net

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net

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