Vodacom to target subscribers with its offering.
JOHANNESBURG – SA’s largest mobile operator’s entry into the insurance market could soon be followed by that of MTN (JSE:MTN) and 8-ta.
Last year, the Financial Services Board awarded cellphone giant, Vodacom a licence which enables it to sell insurance products.
MTN, which has a licence to sell insurance told Moneyweb it’s “currently reviewing various opportunities in the financial services sector, however such considerations are still at the pre-conception stage”.
Mike Fairon, general manager of product innovation and development at MTN SA, says it “would not exclude venturing into such services in the future but cannot commit to a date yet. Should there be any developments in this regard; MTN will appropriately inform its stakeholders and the public”.
8-ta says it is considering moving into the insurance market by the first quarter of this year to “assist subscribers to stay connected and to avoid interruption of services”, said Amith Maharaj, Telkom (JSE:TKG) Mobile’s managing executive.
Maharaj told Moneyweb that it will initially offer handset plus SIM and data devices (dongles) insurance to 8.ta subscribers at a fairly competitive rate, drawing on existing Telkom resources and partners to sell this insurance.
Cell C, however did not respond at the time of publication.
Vodacom, also plans to sell insurance directly to its more than 29m customers without going through a third party.
The move which will assist Vodacom in diversifying its revenue stream was motivated by the mobile operator wanting to improve the range of value added services available to clients, said Tshepo Ramodibe, Vodacom’s acting chief officer of corporate affairs in an e-mailed response. Ramodibe adds that with the new offering Vodacom hopes “to enhance the all-round customer experience so that customer’s lives are not put on hold if something unforeseen happens to one of their mobile devices”.
In the interim, Vodacom plans on expanding and improving on its handset insurance offering and adding additional insurance products for tablets and laptops. At the time of the announcement last year, managing executive of the financial services division at Vodacom Mark Taylor said the company had been granted a short-term and a long-term insurance licence, allowing it to sell funeral cover as well.
"We will start with the short-term insurance product within the next few months and long-term will follow later," he told media. Vodacom has had an insurance offering for the past 14 years where it sold its products to customers via a third party. Whilst it says it has the “capability to provide insurance services” to existing and new customers, it could expand over time possibly hiring more staff.
Vodacom and 8.ta will be competing with several new entrants into the insurance field, like Discovery and FNB and veterans like OUTurance, Budget and Hollard Direct. Despite entering a highly competitive market Ramodibe says Vodacom’s “current products don’t specifically compete with general insurers although there is obviously some overlap. They are very niche and linked to Vodacom’s core capability as a telco (telecommunications company)”.
Vodacom has also elected to underwrite its own insurance offering, so as to “give it more control and flexibility when it comes to its insurance services”.
With SIM card penetration having reached its full potential, and with voice and data revenues facing stiff competition from other providers it isn’t a surprise that telcos are moving into financial services and products.
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