Infraco delays Neotel

Government's indecision over Infraco delayed the launch of the second national operator (SNO) by at least two years, but the company is on track and feeling acquisitive, says Neotel.

Neotel executive head of enterprise sales Stefano Mattiello explains that the Department of Public Enterprises' inability to decide what to do with the telecoms infrastructure of Transnet and Eskom meant the SNO could not launch.

Initially, government promised to make the parastatals' network available to Neotel, but then changed its mind and earmarked it for state broadband provider Infraco. Mattiello says several about-turns then occurred, before government finally decided to hand over the infrastructure to Infraco.

"We had to wait for a resolution. Until that happened, it was difficult to decide whether we would have access to the state infrastructure, or whether we would have to build our own."

Mattiello says it is understandable that consumers are feeling frustrated about Neotel's perceived low-key presence in the market. However, he says South Africans can expect to see a market shake-up when the operator launches its consumer offerings in April.

"Neotel will be a quantum leap beyond anything else that is on the market," he says, explaining that the Telkom rival is rolling out an IPV6 fully-converged new-generation network, delivering true broadband.

Thus far, the company has rolled out 2 000km of metro fibre, covering most of Gauteng, the Western Cape and KwaZulu-Natal, and has 12 000km of fibre in the ground in total.

Mattiello says Neotel's wholesale products, launched in August 2006, and enterprise offerings, launched in November 2007, are doing "extremely well" and he expects a similar response to its consumer products.

However, he points out that the company is not competing with Telkom, in the true sense of the word. "We are delivering something way beyond what Telkom is, so you cannot really compare the two. But it will certainly lower the cost of telecoms by lowering the total cost of ownership.

"This will apply to both our enterprise and consumer clients. We are specifically focusing on providing custom-built solutions for our enterprise clients. That is our big differentiator. It's less flexible in the consumer space, but we are looking at a high degree of value-added bundling - it makes sense to bundle."

Mattiello says Neotel will also look at educating the South African consumer. "The market is asking for what Telkom has been dishing out. South Africans could never ask for what they wanted - and now they simply don't know what they really want."

He says Neotel will seek to deliver quality of service and hopes to capture about 4% of the enterprise market by the end of the year. In a way, he explains, the electricity crisis is working to Neotel's advantage. "I would rather launch in a shrinking market, which will give you a bigger share once it starts growing again."

Mattiello says Neotel is in an acquisitive mood, as this is a good way to grow its footprint in the market. One of its most significant acquisitions has been Transtel, which has a network, resources and skills. However, this deal is still awaiting Competition Commission approval.

While the operator is on the lookout for other targets, Mattiello dismisses the idea of taking over Telkom. "With Telkom you have to look at what you're buying. You must look at the cost of the huge labour force and old network that needs upgrading, as opposed to building your own network. Telkom is simply not worth it."