Neotel 'gifts' to challenge Telkom

Johannesburg - Neo in Sotho means a gift and this is a token the whole of South Africa will hope to receive as Neotel, the second fixed-telephone line operator, rolls out its services.

Tebogo Khaas, president of the SMME Forum, an organisation with interests in the information and telecommunications sector, welcomed Neotel. He said it would bring innovation in the sector.

He said the small-business sector has been waiting for real competition and a drop in prices of broadband internet access.

"As the SMME Forum we will keep our eyes and ears peled and make sure there is no collusion in the market as we have previously seen in the sector.

"The jury is still out on whether real competition will prevail," said Khaas.

He said the forum expected the Independent Communications Authority of South Africa (Icasa) to monitor the industry for any monopolistic practices.

Anti-competitive practices

Icasa chairperson Paris Mashile said the regulator was geared to deal with collusive and anti-competitive practices.

He said Icasa had already set up systems to empower the compliance and complaints committee which would look into allegations of anti-competitive behaviour.

Neotel managing director Ajay Pandey said the entry of the new telecommunications group marked a new era in service provision in the sector and an introduction of new and competitively priced products and services.

Pandey was speaking this week during the unveiling of the second network's new corporate identity and its wholesale products.

He said the official entry of Neotel also marked the opening up of new opportunities for local businesses, including the second economy, and for locals on the global stage.

Pandey said the company would be investing R11bn in capital expenditure in the next 10 years.

Strengthening government's hand

He said this injection would fuel economic growth and Neotel planned to invest in its network and the building of infrastructure.

He said Neotel would use a combination of debt and equity to finance its capital expenditure programme.

Communications Minister Dr Ivy Matsepe-Casaburri said she hoped Neotel would contribute to improved competitiveness in the sector.

She said the launch of Neotel strengthened the government's hand to respond to economic challenges by improving the competitiveness of the economy, sustainable development and investment to meet developmental goals, especially that of universal services.

Shareholders in Neotel are black empowerment group Nexus Connexion, which owns 19%, and the strategic equity partners company owns 51%.

The other 30% is equally-owned by Transnet and Eskom.

Advanced services

Neotel was awarded a 25-year renewable licence in December by Icasa to provide public switched telecommunications services (PSTS) to the public, including provision of fixed mobile service within restricted areas.

Ahead of the launch of Neotel, Telkom chief executive Papi Molotsane said they were geared to offer advanced services and were targeting to grow the voice business and enter the internet protocol TV sector.

Molotsane cautioned that a price war was not in the interests of either company.

He also said Telkom was preparing to lose some of its employees whom they expected Neotel to poach.

Pandey did not want to commit his company to any share market targets.

He said Neotel was looking at opportunities in the business outsourcing industry.

Internet to 2 500 educational institutions

In terms of the licence conditions, Neotel is obliged to connect high-speed internet to 2 500 schools or tertiary education institutions, to provide telecommunications services to 2 500 rural clinics and also a number of other basic services, notably to people with physical disabilities.

Neotel's senior manager for products and solutions, Dr Setumo Mahapi, said the bulk of services being launched were for resale to other service providers within the internet service provision sector, voice and international connnectivity.

These services included carrying international calls from mobile network operators and value-added network services providers in South Africa to their destination countries and handing them over to the more than 400 international partners of Neotel.

The company said it already had enlisted customers in internet Solutions, Cell C, MTN, M-Web, Telecom Lesotho, Telkom, Vodacom and arivia.kom.

The company plans to launch services to the corporate market in December and these would be followed by direct retail and small, medium and micro enterprises' offerings in March.