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Telkom finally ‘gets’ convergence

ADSL, data, line rental, calls and mobile SIMs for under R600 a month.

There’s been one false start after another since 2006, but telecommunication giant Telkom is finally offering true converged services to homes and offices. Its ‘Summer of Wow’ campaign is the culmination of a revived Telkom’s 18 months under CEO Sipho Maseko.

Chief Marketing Officer Enzo Scarcella has clearly been hard at work since joining the operator from Vodacom in February of this year. For the first time in Telkom’s history, it’s productised its offerings in a way that would make sense to consumers. The Summer of Wow campaign itself has hints of other local mobile operators’ summer promotions, complete with talking babies (vintage Scarcella).

Quite why its taken Telkom this long to offer 3G, LTE or ADSL connectivity bundled as five variations of ‘SmartHome’ deals (Basic, Essential, Advanced, Premium and Supreme) is a mystery. Customers understand tiering and Scarcella gets that. They love optional extras (like TVs, laptops, Apple TVs, Kindles, phones) too, and Telkom is finally offering these alongside its connectivity plans in a way that makes sense.

Beyond just connectivity, Telkom’s bundling mobile SIM cards with these deals. So, on SmartHome Advanced (ADSL), for example, you get one SIM with 500MB of Telkom Mobile data a month, and another with 50 minutes of monthly talk time. Most of these SIM cards will likely end up being distributed to friends and family (or worse, in drawers), but if the operator is able to get a percentage of customers to try its network, it may just end up succeeding on converting a decent chunk of them (given its very low base, Telkom Mobile is the only mobile operator with ARPU that’s increasing).

The SmartHome options with ADSL connectivity are offered with a rather juicy carrot: if the service is not installed within seven working days, customers get one month free. Upgrade to (or sign up to) a 10Mbps line, and you get a free DStv Explora decoder.  Order a deal online, and customers get 20% off their first three months. It also has a useful online tool to help customers choose the right package for them (based on number of devices, monthly spend and what they use the internet for).

With all of that (and after comparing these deals with its legacy ‘Mix’ convergence products), you’ll be forgiven for asking: Is this the same Telkom we all know?

This productisation would’ve been impossible just two years ago. For one, the mobile business was being run as a standalone entity (perhaps the correct call for launch, but it prevented Telkom from playing to its strengths). Its first forays into (very basic) converged services saw customers receiving (effectively) two bills and all manner of credits and itemised charges that would need a degree to comprehend.

More importantly, none of these new converged products and services launched under Maseko would’ve been possible without his predecessor Pinky Moholi’s projects to overhaul legacy back office systems. Not too long ago, Telkom relied on a handful of disparate systems to do simple tasks like fulfill an order, or generate a bill for a customer.

(It tried and failed to offer fixed-mobile converged services through Vodacom, when it owned 50% of the mobile operator. No surprises there, given that Vodacom wasn’t too keen to cede its margin.)

This ‘new’ Telkom (astonishing share price rise aside) really is a breath of fresh air. I’ve lost count how many times I’ve written about its renewal in the past decade, but this time it’s backed up with actual products. Scarcella has brought clarity and (real) produtisation to the organisation (hard, when there are nearly 19 000 employees) that it’s lacked.

It finally has a decent deals brochure for converged and mobile products available at stores (I’m willing to bet that’s Scarcella’s doing too). And Telkom’s marketing has a clear message (and a uniform style) for the first time in memory.

In 2012, I wrote: “No one else can offer a fixed voice service, a mobile contract, ADSL and 3G data on a single bill from a single provider.

That remains the case and Telkom knows this. It also knows that it has a final window of opportunity over the next three(ish) years (before mobile operators start making meaningful inroads with fibre to the home services) to grow its converged services customer base.

See a slide from a recent presentation which hints at its aims:

The Summer of Wow is the start. Already we know that it will launch video-on-demand services in 2015. I can’t wait to see where this leads.

Now if only I could get >20Mbps VDSL where I live… or even better, fibre.

* Hilton Tarrant works at immedia and contributes to ‘Broadband’, a column on Moneyweb covering the ICT sector in South Africa.

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