We get it when mature companies spin off side businesses to expand their revenue net. It’s a way to create multiple income streams and stretch their growth ceilings. African telecom giants like MTN and Ethio Telecom make similar business expansion plays. For example, MTN sells low-cost mobile phones and plans to launch a streaming service—again—and Ethio has fingerprints in e-commerce.
But what’s more surprising is when a fashion retailer decides to start making and selling smartphones.
South Africa’s Mr Price did just that. Quietly, it launched a smartphone line called Salt, and in its latest results, the company’s telecoms revenue rose 13.2% to R1.3 billion ($73.1 million). This included the undisclosed sales of its Salt smartphones which it sells through 592 retail outlets in the country.
Yet, this wasn’t a random pivot. Mr Price has been active in the mobile space for years. Its mobile virtual network operator (MVNO) business, Mr Price Mobile, competes directly with other retailers like Shoprite and Pick n Pay in offering low-cost data and prepaid deals. Selling its own devices is a natural extension of that strategy.
Salt smartphones are affordable, priced between R1,399 ($79) and R2,999 ($169), and are sold directly to everyday shoppers in Mr Price stores. Budget smartphones in South Africa start around this price range, so this makes the Salt smartphone an appealing option.
Mr Price says that nearly seven out of ten Salt smartphone buyers also purchase mobile accessories like chargers and cases, keeping the spending inside its own stores. This helps to drive more revenue per customer.
Mr Price is using its massive retail footprint to integrate telecoms into customers’ daily shopping experience. They can pick up a phone while buying jeans or a kettle. It’s not competing with major brands in the country like Apple or Samsung; rather, it is locking in the loyalty of budget-conscious customers who already shop there.
