Fed up with England’s weather and traffic, the new CEO for Virgin Mobile in South Africa, Sajeed Sacranie, decided three years ago to return to the continent of his birth. Not to Malawi where he was born, but to Johannesburg.
He jokes that he may have moved to a better climate but that Johannesburg’s traffic congestion is not something to be sniffed at, which is why he lives in Hyde Park, as close to Virgin Mobile’s Sandton office as possible. Having worked for Virgin in the United Kingdom for eight years, advising on new ventures, Richard Branson was keen to utilise Sacranie’s abilities for his expansion plans in South Africa. These plans have come to fruition in the last week with the launch of Virgin into the cellphone and financial services markets.
Sacranie says help is on the way for consumers who are fed up with South Africa’s existing cellphone operators, which use a minefield of tariff packages, long-term contracts and handset subsidies to disguise the actual cost to the consumer.
“We believe one of the primary areas where there is a huge need is the fact that consumers are currently locked into contracts where they are offered pretty bad service, uncompetitive rates and they think they are getting a free phone, but they are actually paying for it through the nose,” says Sacranie.
He says Virgin Mobile plans to tackle these operators head-on through three simplified, transparent tariff packages, month-to-month contracts and top-notch service. “Currently it’s a take-it-or-leave-it attitude,” says Sacranie about South Africa’s cellphone operators. “Virgin mobile is going to change all that, you cruise when you choose,” he says repeating the Virgin mantra.
Virgin’s entry into the cellphone market occurs against the backdrop of investigations into excessive pricing and a lack of transparency in the sector by the South African regulator. The Independent Communications Authority of South Africa held public hearings into cellphone pricing in May and handset subsidies in August last year. Add to this the fact that cellphone–number portability is expected to be introduced later this year, which will allow consumers to switch operators while retaining the same number.
Sacranie says Virgin’s value add will come with their per-second billing. “You are going to be billed per second from the first second, which means we never really steal your seconds. We don’t round up without you knowing it. A huge number of packages in this market are based on a per-minute or per-half-minute round-up, which means the consumer ends up paying about 20% more than they should be or they think they are. It can be up to 50% depending on the types of calls they make,” says Sacranie.
He says the consumer is overwhelmed with the “fog” that is the hundreds of tariff offerings. “Pro Call 100, My Weekend, your Weekend, every weekend, business chat, casual chat, never chat, always chat; we have three rates and that is where we stop.”
Virgin Mobile’s three packages are a commitment of a R500 monthly spend, a R100 monthly spend and a tariff option that requires no monthly spend commitment. Each package has a different call rate for the first five minutes of every day, but after the subscriber has used their first five minutes the calls are billed at R1,55 whether the call is off-peak, on-peak or cross-network.
Pre-paid customers will also be glad to hear that they will be billed at the same rates as the post-paid customers. “Pre-paid consumers have had a crap deal; they pay in advance and yet they get charged the highest rate. It is counter-intuitive, we have changed that. We are saying to the pre-paid guy we appreciate that you are paying ahead, you will get the same rate as our post-paid guys,” says Sacranie.
He expects the other cellphone operators to be aggressive in response to the launch of Virgin Mobile. All three existing operators ran full-page adds in the weekend papers following Virgin’s launch.
“Once the customer looks at our offering, it will be blatantly clear why they should move to us,” says Sacranie.
Virgin’s voice and data traffic will be carried on the network of South Africa’s third cellphone operator, Cell C, following the setting up of a 50-50 joint venture.
Sacranie says Virgin is targeting a 10% market share within five years and says it has its eye on other lucrative cellphone markets in Africa such as Nigeria, but wants to perfect its model in South Africa first.
Virgin Mobile, which currently boasts more than 8,5-million subscribers worldwide, first launched in the UK in November 1999 and has subsequently launched in Australia and the United States.