Skip to content

TFG launches mobile network – Moneyweb

  • by
TFG launches mobile network – Moneyweb

TFG Limited, the owner of Foschini, Markham, Exact, Jet, @home and 15 other retail brands, has launched a mobile virtual network operator (MVNO) called TFG Connect, that will piggyback on MTN’s network.

TFG is the fourth major retailer to enter the space, following Mr Price, Pick n Pay and Shoprite k’nect.

FNB and Standard Bank also operate MVNOs for their customers, with the former believed to be the largest in the country.

The entry into the space has been somewhat muted, with targeted communication to its customer base. It has also positioned the offer to Jet (and Jet Cellular) customers in particular.

Airtime top-ups can be done in store, online on its TFG Connect website, or via USSD. Recharges via USSD will be billed to customers’ TFG Money account.

In other words, these purchases will be on credit. It also offers top-up contracts (‘Pay Monthly’), where the monthly fee is charged to the customer’s account.

SIM cards are available at TFG stores at a cost of R9. The linking of the SIM card to the account is automatic and part of the RICA process. All new subscribers get 200MB per month for six months, as well as a once-off 250MB WhatsApp bundle and R29 airtime.

Incentives

TFG is clearly using its MVNO to further incentivise its account holder base.

If customers pay their accounts in full by the due date each month, they will receive 200MB of data.

Paid-up customers who subscribe to any of TFG’s magazines will receive airtime to the value of the highest subscription. Paid-up active Jet Club members will receive R46 airtime (the value of the subscription) by the 7th of the following month.

Recharges are at a 10% discount, so R10 worth of airtime costs R9 while R50 worth of airtime costs R45.

Data prices are either in line or slightly cheaper than MTN’s. For example, 100MB of data (30 days) is R20 – the same price; 1GB of data for 30 days is R79 (versus MTN’s prepaid price of R85).

The numbers

TFG has the largest retail credit account base in the country, alongside Truworths.

Last year, it made R175 million in Ebit (earnings before interest and taxes) from its credit book.

It generated R1.6 billion in other income last year, with R767 million coming from ‘value-added services’. These include its various magazines and club subscriptions as well as financial services ventures, such as its partnership with TymeBank. In 2019, it disclosed that it offered 21 magazines and 18 insurance products to customers. Jet reported R200 million in ‘other’ revenue, with retail turnover of R5.1 billion.

Selling cellphones at its stores is a massive business for TFG. In 2022, this category generated retail turnover of R2.9 billion.

This is more than its homeware category (R2.2 billion) and its cosmetics and jewelery categories combined (R2.4 billion). The group’s cellphone sales grew by 9.4% last year, contributing around 9.5% of retail turnover in the Africa (predominantly South Africa) business.

Competitive space

Telecoms and financial services (its in-store accounts) is a big business for Mr Price Group. Financial services and telecoms topped R1 billion in revenue last year, out of total revenue of R28 billion. Historically, its gross margin on telecoms has been just less than 20%.

The group said earlier this year that: “Mr Price Cellular, launched in 2017, has reported exponential growth since inception and is now available in 374 stores with promising growth opportunities, most notably the roll-out of standalone stores.”

It is pushing value aggressively, with account customers getting 50% of their account spend back as well as a free 500MB WhatsApp bundle each month when they recharge with R50 or more.

Both Shoprite and Pick n Pay’s efforts have been more muted, even though both have very large loyalty programs. They both know an enormous amount about these customers and could potentially start leveraging these bases more intelligently. Already Shoprite is offering double the recharge value as a promotion when this is done with its new bank account, the Money Market Account.

Expect TFG to be even more aggressive, especially in the Jet base, once its virtual network starts getting traction.

Leave a Reply

Your email address will not be published.