A new mobile virtual network operator, AppChat, will launch in South Africa by the end of the year, seeking to challenge the domination of telco giants MTN and Vodacom and in the process cut call costs.
AppChat is the brainchild of former ECN Telecommunications CEO John Holdsworth , and will be the second such operator after Virgin Mobile.
Holdsworth is looking to shake up South Africa’s mobile market by targeting high-end customers and offering them better prices and customer service. He wants to slash mobile costs by up to 50 percent and offer high quality voice products.
“I saw a great opportunity in mobile,” he said. “If you look at the fixed line space in South Africa it’s very competitive. That’s not the case in mobile, which is dominated by Vodacom and MTN. I see enormous opportunities for new entrants.”
In order to tackle this domination and make a sizeable impact on the market, Holdsworth says detailed planning is necessary.
“You have to be very clear about how your solution is going to change the market and give value to customers,” he said. “It’s not just a case of discounting, because that hasn’t necessarily been that successful.”
Targeting a specific portion of the market is crucial to the success of any new entrant, he believes. In AppChat’s case, they are looking at the higher end of the market, which Holdsworth says accounts for around 80 percent of the income made by the telcos.
“We want to target the high value customers,” he said. “We want to cherry-pick MTN’s and Vodacom’s best companies. We want to target them and say to them that “We can give you a better value service”.”
“Whatever you do has got to result in a major shift in market share. You have to be very precise, very surgical, about what market share you are targeting.”
AppChat is set to offer cheaper calls, as well as simpler plans and the promise not to lock customers into long-term contracts. Holdsworth also promises simple package structures that are easy to understand, with a single per-second all-day rate for off-net calls and none of the separate in-bundle and out-of-bundle rates favoured by large network operators.
He also promises a higher level of service to his customers, which he says is at odds with the current level of customer care in the country.
“I think customer service is done particularly badly in SA right now,” he said.