Johannesburg - Neotel, the subject of a takeover bid by Vodacom, will prioritise continued investment in the roll-out of fibre-optic infrastructure and lowering prices, particularly for voice and data consumption in homes through innovation, according to chief executive Sunil Joshi.
The company was on track to spend R500 million of planned investment in the extension of its fibre-optic network to 16 500km and the roll-out of fibre-optic cable in metropolitan areas by the end of the financial year in March, Joshi said on Friday.
Neotel also expected double-digit growth of its revenue and profit line during the calendar year, but Joshi was unable to reveal figures as Neotel is a privately held firm. “We are looking to continue to invest based on our previous plans. Are we going to slow down? No, for us it’s business as usual.”
Neotel is straddling the commitments of growing the seven-year-old converged telecommunications business and co-operating with the due diligence process that is under way by Vodacom, South Africa’s largest cellular network provider. The parties announced in October last year that they were in exclusive discussions regarding Vodacom’s bid for Neotel, which is majority owned by India’s Tata Communications.
Joshi also expects double-digit customer growth to continue during 2014, although he anticipated a tough period over the next 12 to 18 months for the economy. The impact of a weaker rand may boost sales as clients switch to cheaper telecommunications services.
There is greater demand for broadband services and interest in Neotel’s pay-as-you-go consumption models for its data services. Small and medium-sized enterprises, as well as families, are emerging as large guzzlers of broadband for applications that include Facebook, video streaming and other social apps. Businesses are requiring greater broadband speeds to remain connected to their customers, suppliers and staff.
“We’re finding that people want faster speeds at affordable prices. The need for speed is certainly increasing. The need for bigger capacity is also increasing and, with both of these, will come economies of scale, therefore you will see the unit price also decline year on year,” Joshi said.
In June last year, the firm was rated the best for broadband in South Africa based on criteria including speeds offered and quality of service, in a study concluded by Mybroadband, an online publication.
Neotel is reviewing the delivery of its services to customers and recently launched the pay-as-you-go model for customers using a wide area network (WAN) solution. The latter innovation evolved from customer feedback during a survey a year ago.
“The cycle of implementation over the next three to six months will see greater traction on services, such as the usage-based WAN because it is a complex service. And as we crack the code for complex services on pay-as-you-use models, it will become a way of doing things going forward.”
Video has also gained popularity for enterprise customers to host product launches, meetings, organisational feedback and supplier briefings. Neotel recently launched a secure solution that offers simultaneous video operability on mulitiple platforms, such as tablet devices, handsets and laptops. This technology has not been launched before in South Africa, according to Joshi.
Its rival, Telkom, is also gearing up for video services.
Sipho Maseko, the chief executive, wrote in an opinion piece in the Business Times newspaper yesterday that the fixed-line services provider hoped to “have an integrated offer for consumers, including uncapped internet, voice services and video-on-demand under one flat rate” by early next year. - Business Report