TELECOMS

VIRGIN SET TO PIGGYBACK ON CELL C BRAND IN SOUTH AFRICA

A new cellular network service branded by the Virgin Group should be launched within months, running on the network infrastructure of Cell C. The companies will set up a joint venture operator trading under Virgin's name, chasing more affluent consumers and business users who have shied away from Cell C.

The venture had been under discussion for months and most of the plans were now in place, Cell C marketing head Simon Camerer said on Wednesday. "A lot of the agreements are concluded so it's just the final signatures. Virgin doesn't announce anything until it's done, but there's fire where there's smoke. Virgin needs to decide when to launch, but I don't think it's months away."

The venture should be launched before number portability is introduced, which will let customers switch networks but retain their number. That should happen later this year, letting the new operator capitalise on customer defections.

Virgin operates as a "virtual mobile network operator" in Australia, Canada, the UK and the US by buying airtime and messaging services from an existing player and packaging them under its own name.

That has long been illegal in SA, and nobody has tested the slightly more liberal landscape created by the communications department this year to see if it is now permitted.

Instead, Virgin will work as a glorified service provider, rather than an operator in its own right needing to hold a licence. "Virgin will enter the market as an enhanced service provider by leveraging the capacity and back-end systems from Cell C. It will be a 50-50 split between the two organisations," said Camerer.

Virgin first discussed the virtual network model many years ago with Vodacom, but the talks were canned because of its illegality. Now it has chosen to partner with Cell C, even though Cell C is partly reliant on Vodacom's network to carry its calls in regions where Cell C is yet to build its own facilities.

Camerer said Virgin was keen to work with Cell C for several reasons. "We are similar in attitude and the way we approach the market."

The network was expanding and now carried 75% of its own traffic, with the capacity to handle additional calls generated by the joint venture, he said.

For Cell C the deal could end its problem of failing to win high-end consumers and business clients, who typically sign long-term contracts with MTN and Vodacom. Cell C entered the market chasing young, less affluent, prepaid users.

In the past year it has worked to change that image and woo more contract customers. Camerer said that had paid off, as it had won 23% of all new contract customers in recent months.

Tying up with a world-class partner with a strong brand would let Cell C chase a certain portion of the market that had traditionally gone to Vodacom or MTN, Camerer said.

"It's a great vehicle to go after those subscribers who have been in the market from the start, and who are aware of Virgin Mobile, Virgin Atlantic and Virgin Active and understand the brand."

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