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Johannesburg - On the fourth anniversary of its operations in South Africa, telecommunications network operator Neotel has snubbed consumers, saying it has little interest in anything other than corporate and middle-sized companies as well as its wholesale customers.
The company was awarded South Africa's second network operator (SNO) licence in 2005 with a firm mandate to tackle the monopoly of incumbent network Telkom [JSE:TKG]. Since then the market has been effectively deregulated in terms of network licences, but Neotel's licence remains unique and enables it as a tier one telecommunications operator.
Neotel CEO Ajay Pandey on Wednesday said only 10% of his company's customer base consists of consumers. Enterprise customers make up 60% and the remaining 30% are wholesale customers.
"The consumer segment is a young business and a small contributor," said Pandey.
He added that the consumer market is not a priority and insisted that Neotel is not behind target in meeting this sector.
"We have focused on specific needs from consumer customers and we have a steady focus on niches in that market," he said. "This is a young business for us and a small business consciously."
However, managing director of independent research and consulting firm World Wide Worx Arthur Goldstuck said serving the consumer market was a premise underpinning Neotel's SNO licence.
"The only reason Neotel has any semblance of consumer services is because they are required and expected of them," said Goldstuck. "They have a pittance of consumer services and it is clear that if they could, they would abandon them altogether."
Gold rush for corporate wallets
He said Neotel and other telecommunications operators in South Africa are targeting low hanging fruit in the form of corporate enterprise customers.
"There is a lucrative corporate market and no ownership of that market outside Telkom's monopoly, but with that monopoly vanishing, it's like a gold rush," said Goldstuck.
Goldstuck said telecommunications companies have forgotten the intention of revitalising telecoms offers in South Africa has been to change the consumer environment.
"The core intention of all licences offered (to telecommunications companies and service providers) was to benefit the people of South Africa. Instead, what we're seeing is a rush for the corporate wallet."
Pandey estimated Neotel has managed to capture between 10% and 12% of the corporate market in SA, and said that the mid-market is a key focus for this year (2010).
Neotel was started with R7.4bn in funding and has spent R3.5bn on infrastructure to date.
The company is 56% held by India's Tata Communications, 19% by its black economic empowerment partner Nexus Connexion and 25% by equity partners Communitel and the Two Consortium.
Pandey said that the large shareholding by Tata Communications was of strategic value to Neotel, as this allows it to leverage the services and resources of a global telecommunications provider and perform well as a wholesale provider.
- Fin24.com
The company was awarded South Africa's second network operator (SNO) licence in 2005 with a firm mandate to tackle the monopoly of incumbent network Telkom [JSE:TKG]. Since then the market has been effectively deregulated in terms of network licences, but Neotel's licence remains unique and enables it as a tier one telecommunications operator.
Neotel CEO Ajay Pandey on Wednesday said only 10% of his company's customer base consists of consumers. Enterprise customers make up 60% and the remaining 30% are wholesale customers.
"The consumer segment is a young business and a small contributor," said Pandey.
He added that the consumer market is not a priority and insisted that Neotel is not behind target in meeting this sector.
"We have focused on specific needs from consumer customers and we have a steady focus on niches in that market," he said. "This is a young business for us and a small business consciously."
However, managing director of independent research and consulting firm World Wide Worx Arthur Goldstuck said serving the consumer market was a premise underpinning Neotel's SNO licence.
"The only reason Neotel has any semblance of consumer services is because they are required and expected of them," said Goldstuck. "They have a pittance of consumer services and it is clear that if they could, they would abandon them altogether."
Gold rush for corporate wallets
He said Neotel and other telecommunications operators in South Africa are targeting low hanging fruit in the form of corporate enterprise customers.
"There is a lucrative corporate market and no ownership of that market outside Telkom's monopoly, but with that monopoly vanishing, it's like a gold rush," said Goldstuck.
Goldstuck said telecommunications companies have forgotten the intention of revitalising telecoms offers in South Africa has been to change the consumer environment.
"The core intention of all licences offered (to telecommunications companies and service providers) was to benefit the people of South Africa. Instead, what we're seeing is a rush for the corporate wallet."
Pandey estimated Neotel has managed to capture between 10% and 12% of the corporate market in SA, and said that the mid-market is a key focus for this year (2010).
Neotel was started with R7.4bn in funding and has spent R3.5bn on infrastructure to date.
The company is 56% held by India's Tata Communications, 19% by its black economic empowerment partner Nexus Connexion and 25% by equity partners Communitel and the Two Consortium.
Pandey said that the large shareholding by Tata Communications was of strategic value to Neotel, as this allows it to leverage the services and resources of a global telecommunications provider and perform well as a wholesale provider.
- Fin24.com
