TFG Limited, the proprietor of Foschini, Markham, Exact, Jet, @house and 15 different retail manufacturers, has launched a mobile digital network operator (MVNO) referred to as TFG Connect, that will piggyback on MTN’s network.
TFG is the fourth main retailer to enter the house, following Mr Price, Pick n Pay and Shoprite ok’nect.
FNB and Standard Bank additionally function MVNOs for his or her prospects, with the previous believed to be the most important within the nation.
The entry into the house has been considerably muted, with focused communication to its buyer base. It has additionally positioned the provide to Jet (and Jet Cellular) prospects specifically.
Airtime prime-ups may be finished in retailer, on-line on its TFG Connect web site, or by way of USSD. Recharges by way of USSD might be billed to prospects’ TFG Money account.
In different phrases, these purchases might be on credit score. It additionally presents prime-up contracts (‘Pay Monthly’), the place the month-to-month price is charged to the shopper’s account.
SIM playing cards can be found at TFG shops at a value of R9. The linking of the SIM card to the account is automated and a part of the RICA course of. All new subscribers get 200MB per 30 days for six months, in addition to a as soon as-off 250MB WhatsApp bundle and R29 airtime.
Incentives
TFG is clearly utilizing its MVNO to additional incentivise its account holder base.
If prospects pay their accounts in full by the due date every month, they are going to obtain 200MB of knowledge.
Paid-up prospects who subscribe to any of TFG’s magazines will obtain airtime to the worth of the best subscription. Paid-up lively Jet Club members will obtain R46 airtime (the worth of the subscription) by the 7th of the next month.
Recharges are at a ten% low cost, so R10 price of airtime prices R9 whereas R50 price of airtime prices R45.
Data costs are both in line or barely cheaper than MTN’s. For instance, 100MB of knowledge (30 days) is R20 – the identical worth; 1GB of knowledge for 30 days is R79 (versus MTN’s pay as you go worth of R85).
The numbers
TFG has the most important retail credit score account base within the nation, alongside Truworths.
Last 12 months, it made R175 million in Ebit (earnings earlier than curiosity and taxes) from its credit score e-book.
It generated R1.6 billion in different revenue final 12 months, with R767 million coming from ‘value-added services’. These embrace its numerous magazines and membership subscriptions in addition to monetary companies ventures, similar to its partnership with TymeBank. In 2019, it disclosed that it provided 21 magazines and 18 insurance coverage merchandise to prospects. Jet reported R200 million in ‘other’ income, with retail turnover of R5.1 billion.
Selling cellphones at its shops is an enormous enterprise for TFG. In 2022, this class generated retail turnover of R2.9 billion.
This is greater than its homeware class (R2.2 billion) and its cosmetics and jewelry classes mixed (R2.4 billion). The group’s cellphone gross sales grew by 9.4% final 12 months, contributing round 9.5% of retail turnover within the Africa (predominantly South Africa) enterprise.
Competitive house
Telecoms and monetary companies (its in-retailer accounts) is a giant enterprise for Mr Price Group. Financial companies and telecoms topped R1 billion in income final 12 months, out of complete income of R28 billion. Historically, its gross margin on telecoms has been simply lower than 20%.
The group stated earlier this 12 months 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 worth aggressively, with account prospects getting 50% of their account spend again in addition to a free 500MB WhatsApp bundle every month once they recharge with R50 or extra.
Both Shoprite and Pick n Pay’s efforts have been extra muted, regardless that each have very giant loyalty programmes. They each know an unlimited quantity about these prospects and will doubtlessly begin leveraging these bases extra intelligently. Already Shoprite is providing double the recharge worth as a promotion when that is finished with its new checking account, the Money Market Account.
Expect TFG to be much more aggressive, particularly within the Jet base, as soon as its digital network begins getting traction.