I. CELL C FROM MVNO TO INDEPENDENCE... 3 II. HOW DOES THE THIRD OPERATOR BE COMPETITIVE IN A MOBILE MARKET?... 4

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1 Case Study Cell C

2 TABLE OF CONTENTS I. CELL C FROM MVNO TO INDEPENDENCE... 3 II. HOW DOES THE THIRD OPERATOR BE COMPETITIVE IN A MOBILE MARKET?... 4 III CELL C THE INTRODUCTION OF A NEW BSS SOLUTION FROM HUAWEI... 6 IV FASTER DECISION-MAKING AND INNOVATION A POTENT COMBINATION... 8 LIST OF FIGURES FIGURE 1 - MOBILE SUBSCRIPTIONS MARKET SHARE IN SOUTH AFRICA, FIGURE 2 - MOBILE SUBSCRIPTIONS AND PENETRATION IN SOUTH AFRICA..4 FIGURE 3 - KEY SUCCESS FACTORS FOR THE NGBSS IMPLEMENTATION AT CELL C 7 2

3 I. Cell C From MVNO to independence Launched in 2001, Cell C is South Africa s third cellular operator after Vodacom and MTN. With over 8.5 million subscribers at the end of 2010, Cell C was the first cellular provider to operate a dual band GSM 900/1800 MHz network in the country. Despite starting as a MVNO style network, depending on Vodacom specially for its data coverage, Cell C's network today covers more than 30% of South Africa s geographic area and over 87% of the country s population. As of the end of 2011 we expect Cell C to have almost 9.1 million subscribers. In order to grow and to become competitive in new segments, freeing itself from the dependence of its competitors, mostly from Vodacom, the company completed its technological migration to a new sophisticated HSPA+ network, so its network could cope with more traffic and the demand for new services in 2010 This network update was part of a recent refresh in the company s strategy aiming to change how Cell C does business. Cell C has had a significant success addressing the low-end segment, which has made the company s market to increase from 1.9% market share in the its first year of operation to 16.3% in Now, Cell C wants to keep focusing on competitive pricing, however, including services that allow it to compete for high-end and even business customers. Therefore, this network update was necessary for Cell C to address a new demand for advanced services such as cloud computing, content providing and other data services. This transition cost to the company was over R5 billion (US$660 million), the price of its state of the art HSPA+ network. The new network supports speeds of up to 21 MB/s upload and 42MB/s, download and is available in most parts of South Africa. The 900MHz band has been re-assigned to provider greater coverage compared to other operators. Following this new direction, in 2010 Cell C introduced South Africa's most affordable prepaid data sticks, with download limits of 2Gigs and 5Gigs, at U$175 and U$294 per year respectively. Other services from Cell C include video messaging, MMS, internet, voice mail, Blackberry, etc. Cell C is owned by 3C Telecommunications, which is 60% owned by Oger Telecom South Africa, a division of Saudi Oger; 25% owned in an unencumbered holding by CellSAf, (a Broad-Based Black Economic Empowerment entity representing over 30 black empowerment companies and trusts), and 15% by Lanun Securities SA (Lanun is a wholly owned subsidiary of Saudi Oge Ltd). Figure 1 - Mobile Subscriptions Market Share in South Africa, 2010 Source: Pyramid Research, Operators. 3

4 II. How does the third operator be competitive in a mobile market? South Africa is a country with a developed mobile communications market. Mobile subscriptions in the country are expected to surpass 55 million in 2011, which translates into a penetration rate of 108% of the population (figure 1). Figure 2 - Mobile Subscriptions and Penetration in South Africa Source: Pyramid Research,2011 Not only is the market in South Africa developed, it is also very competitive. The country has two traditional mobile operators, Vodacom and MTN, that have had a presence in South Africa since the roll out of mobile communications, and in the past 10 years two new and aggressive companies joined the market: Cell C, a completely new entrant, and Telkom, the mobile arm of South Africa s incumbent of the same name. In order to compete against the more established companies, the new entrants, especially Cell C, knew that their success would not rely only in attracting new customers, but would also require attracting current clients from the competition. For these new entrants to succeed, their offer would have to have enough appeal to change South Africa s market dynamics and attract users in all tiers of spending and service usage. Cell C was aware of this challenge from the beginning, and being extremely competitive was always an element of its strategy. In the first years of operation, the company decided to focus its strategy on price-sensitive customers that were at the moment not served by any other operator in South Africa. However, in order to sustain significant growth and become a major operator, Cell C s shift its strategy and started focusing on attracting high-end and even business customers by offering high value services at competitive prices. Examples from new offers coming from this shift in strategies include offers to pre-paid customers that evolved from 10 free extra airtime minutes for every R10 (accumulated) spent on recharging 4

5 to more sophisticated promotions such as the one in which for every R1 a customer recharge, it receives 10MB of data, 1 SMS and 1 free minute, for charges of a minimum of R50. In 2010, Cell C also introduced South Africa's most affordable prepaid data plans, with download limits of 2 GB and 5 GB, at U$175 and U$294 a year respectively. While these plans have been successful in accelerating subscriber growth, they also placed greater demands on the Cell C network. These demands were not only related to the traffic generated by the free minutes and free data, which was solved with the deployment of the HSPA+ network, but also related to the structure needed to keep track of all these extra benefits, as well as their usage and correct billing. With the imbalances and delays generated by the 128 different IT platforms being used by Cell C and many gateways among them, marketing strategies and operations began to disconnect. The company s IT system could not handle the needs of this young and fast-paced company, which is why Cell C decided to upgrade its IT infrastructure. Time to market was among the many issues the legacy systems created. Cell C knew that in order to attract new clients, its products had to be timed correctly and innovations couldn t take too long since the operator had to keep reinventing its services and products in order to keep up with its attractiveness in comparison to its competitors. However, the time for the implementation of these new services was fluctuating between 3 and 6 months, when the ideal was to have it under 3 months. Besides the long time to market, other problems related to the old systems included faulty billing, lack of visibility of client s activities and usage among many different paying methods (prepaid, postpaid, hybrid) and difficulties to implement new promotions due to the need to adapt it to several systems. 5

6 III Cell C The Introduction of a New BSS solution from Huawei In order to become more competitive and address a new segment, Cell C took the next step to improve its time to market and level of service. For that, the company decided to upgrade its network to a state of the art HSPA+ network and also to migrate from its more than 128 existing IT systems to a platform designed by a single provider, eliminating the need for gateways and the recurrent adaptations they required, which were slowing down the company. In fact, speed became a very crucial element to Cell C s strategy. Not only did Cell C decide to implement a new BSS solution, but it also decided that this transition needed to happen at a very fast pace. Cell C would only sign a contract with a provider that could agree to implement the solution in a 6 month timeframe. It also required that the actual switch over to the new system should happen during a single weekend, minimizing any problems it should cause. After clearly identifying its needs and requirements, Cell C consulted with several renowned BSS providers for the solution that would best meet its needs. However, there was only one company that could actually deliver a solution that was very close to what Cell C was looking for in the company s demanded timeframe. The solution and provider chosen were the NGBSS solution from Huawei. Huawei went the extra mile to understand Cell C s business challenges brought by service convergence and rising customer sophistication. By leveraging its extensive telecommunications and IT expertise and in-depth benchmarking analyses of Cell C's current business and operations, Huawei has supported Cell C's business and strategic transformation through the delivery of an end-to-end NGBSS solution. The solution has been implemented based on the application of industry best practices including customer relationship management (CRM), IP contact center (IPCC), convergent billing system (CBS), partner relationship management (PRM), management services, mediation and provisioning. As mentioned before, one of the concerns raised by Cell C was the time taken by the implementation of the new system. The company not only needed the new system to be implemented, but they also required all existing products, services and customers to be migrated from their legacy system into the new system, all in a timely fashion. In order to comply with Cell C s requirements, Huawei went through detailed planning, executing several dry runs, and data migration testing. The whole process took more than the 6 months originally foreseen by Cell C and Huawei, but all of that was made to guarantee that the switchover to the new system would not take longer than 18 hours and that the network would not be down for more than six hours. After an extensive testing, the process was executed along a strict timetable, with the actual transfer of services only taking five hours, leading into six hours of extensive post-migration testing. Cell C shops and retail outlets were back online doing business by noon on Sunday, after closing at normal business hours on Saturday. The continued support post cutover allowed Cell C to make smooth progress in the final post cutover steps, resulting in minimal impact to its clients. It is also important to mention that this successful transition was made possible not only by the commitment of Huawei to its client, but also by Cell C s own commitment to the new strategy. The fully engagement of Cell C s executive team in this transition, speeded up the process and allowed for the migration to happen as fast and as smooth as possible as it was mentioned by Michael Ansley, a company s executive in Business Partnerships. 6

7 This full commitment was also embraced by Cell C s marketing team which launched a PR campaign. The objective was to inform all of Cell C s customers of the transitions the company was undergoing and what they should expect from the new Cell C after they were completed. This strategy had a very positive impact and generated a lot of trust among Cell C s customers, which certainly helped to minimize any possible client loss. Michael also highlighted the importance of Huawei s technical expertise during the process and the company s transparency. Huawei provided Cell C with a real time dashboard with which the South African operator could have full visibility of all the steps happening during the whole process. It helped Cell C not only to understand all of the steps and challenges of the process as well to plan accordingly in case of any unforeseen event, which was also crucial for a smooth and successful transition says the executive at Cell C. Figure 3 - Key Success Factors for the NGBSS implementation at Cell C Source: Pyramid Research,

8 IV Faster decision-making and innovation a potent combination After a successful implementation, Huawei s NGBSS solution now provides Cell C with many capabilities that the company didn t have before. With a single solution, Cell C can now take better and faster decisions. With the NGBSS, Cell C is able to generate accurate and real-time usage data for its post-paid, prepaid and hybrid services, making the network planning faster and easier. Also, Cell C can now offer a single bill for all services, when before, the time to process data from multiple IT platforms often incurred in several bills. The number of vendors was reduced from more than 15 to 3, the interface types from more than 10 to 4, the number of databases from 68 to 25, and the number of ESB buses from 3 to 1 Billing problems, which were a major complaint among Cell C customers, were significantly reduced. After the implementation, this issue was reduced to a point barely exists and it is not a concern for the South African operator anymore. The average service provisioning time is reduced from 1.5 hours to 6 minutes. Unified customer care and products are realized, and customer complaints are reduced by 40%. The new system has also been allowing Cell C to launch innovative and unique products and services to the market in a timely fashion. Through configuration, the customization workload of the new products is reduced by 60%, reducing the OPEX in the process. For instance, the time to market for new services that used to take between three weeks is now reduced to less than three days for most cases. It is important to mention though that the whole process is still not finished and Huawei and Cell C are still working together to unleash all the benefits the NGBSS can provide to Cell C. With that, Cell C is now recognized as one of the boldest operators in South Africa, offering many data and voice plans that suit the need of the most advanced users in the country without having to charge a high premium to provide these services. From a marketing perspective, the transition was also very positive for Cell C. Since the beginning of the NGBSS implementation, Cell C opted to make the process public, using several media to interact with its clients and advise them regarding what was happening on its network and what clients should expect before and after this process. During the actual switch over, there were several ads in place warning clients that the network could face some instability and not work properly during that process. Cell C preferred to adopt a strategy of clear communication, so clients could understand that any problem that might have happened would be a consequence of a one-time event that would end up having a very positive impact on the company s services for the years to come. Cell C s strategy paid-off. Not only did the company benefit from the flawless transition between the old system and the new NGBSS, but clients also feel more connected to company, believing that they participated in this important step. 8

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