Alan Knott-Craig’s smart play

The Cell C CEO is making the right strategic moves and hitting his rivals where it hurts. By Duncan McLeod.

Alan Knott-Craig’s move to simplify Cell C’s tariff structures is a smart strategic manoeuvre. He’s making it easy for customers to understand what they’re getting for their money. It’s long overdue in an industry where the bigger players bewilder their customers with complexity.

Knott-Craig, the founding CEO of Vodacom, has certainly been making waves since he took the reins at Cell C in April. He’s slashed the cost of calls to all local networks to 99c/minute on per-second billing. He’s cut data prices on promotional products — with permanent cuts expected to follow in the next few weeks — and he’s thrown down the gauntlet on international tariffs, too.

Perhaps more significantly, though, in the few months he’s been in the role, he’s moved to simplify tariff options for consumers, offering the same rate to any network at any time on per-second billing for both postpaid and prepaid customers.

Knott-Craig told me in a recent interview that the company took a conscious decision that it would not release new products that could not be understood by a five-year-old. He said the company had to overcome a “psychological barrier” not to introduce “a mirror here and a bit of smoke there”.

Other operators have balked at Cell C’s 
new tariffs. MTN, most notably, said its MTN Zone product, which offers discounts based on the time of the day or week and network traffic load, meant it had the most affordable rates in the market. But that missed the point entirely. I dare anyone outside MTN’s billing department to explain exactly how much one can expect to pay at any given time of the day. It’s hard to budget that way. It’s my job to write about this industry yet even my head hurts when I read through the big operators’ tariff plans!

Knott-Craig said it was too early to tell whether the simplified and lower-cost tariffs from Cell C were having an impact on its market share or whether customers of MTN and Vodacom were leaving them. The picture should become clearer in the next few months, but what’s already certain is that
 Cell C’s new boss is thinking big. He said soon after he was appointed that he wanted the operator to notch up 25% of the local market. Everyone assumed at the time he meant he wanted 25% of the active subscriber base in SA; he’s now clarified that he was being even more aggressive — he wants a quarter of the total cellular revenue pot.

If anyone is going to fix Cell C it’s going to be Knott-Craig. He helped build the industry, turning Vodacom into the country’s largest mobile operator. He did this, in large part, by creating a powerful distribution channel and a solid nationwide network. But he was also complicit in creating the complexity the industry lives with today. In his new role, he appears determined to set that right — perhaps if only because it’s in the best interests of Cell C to do so.

Vodacom is clearly worried about Knott-Craig. It reacted quickly to Cell C’s cut in prepaid tariffs, announcing new rates of its own. But in its haste to beat the smaller operator to the punch, it landed in hot water with the regulator when it rushed its new tariffs to market without following tariff-filing regulations to the letter. It was forced into an embarrassing about-turn.

In my interview, Knott-Craig described his bigger rival as a “formidable machine” and a “powerful, well-oiled juggernaut”. But he’s determined to carve a much bigger market for Cell C, saying that if it doesn’t reach revenue market share of 20%-25%, it will be hard to build a self-sustaining business. “There is no alternative; you can’t be a national network and a niche player,” he said. “There’s no such thing.”

It seems the SA cellular wars are just getting started.  — (c) 2012 NewsCentral Media

• Duncan McLeod is editor of TechCentral; this column is also published in Financial Mail