Neotel bags SITA contract

By Martin Czernowalow for Neotel
Johannesburg, 21 May 2007

Competition to provide government with fixed-line ICT services is heating up as Neotel pipped Telkom to the post, winning a multimillion-rand government contract, ITWeb can exclusively report.

Second national operator Neotel has landed a large government tender to assist the State IT Agency (SITA) in its plans to upgrade government's common core network and deploy its next-generation network services.

An official announcement will be made at a media conference later this week.

A source close to the process says the contract is worth R100 million over a five-year period. However, SITA communications GM Elton Fortuin refused to confirm the figure or comment on the details of the contract.

He says public service and administration minister Geraldine Fraser-Moleketi will officially announce the contract in Sandton, on Wednesday.

Neotel also refused to comment on the matter, saying a joint statement with SITA would be released in due course.

Losing market share

Telkom said last year it expected to lose some government contracts following the launch of Neotel. Government contracts account for 9% of Telkom's total fixed-line operating revenue.

The fixed-line operator also said it expected to lose up to 15% of its market share in the next five years.

Another key area where Neotel is likely to compete aggressively with Telkom is in the provision of a private telecommunications network (PTN) for government. Part of the tender awarded to Neotel is said to include a PTN component.

Former SITA CEO Mavuso Msimang previously noted that plans were under way for government to establish its own PTN. "Government can save a lot of money by running its own network."

He said the agency holds a PTN licence. Should government establish its own private network, Telkom stands to lose millions in annual revenue, he added.