Neotel on track with roll-out

By Damaria Senne for Neotel
Johannesburg, 12 Jan 2007

Neotel is on schedule to offer international and national private leased circuits (leased lines) to large enterprises from February, providing alternative routing for existing services in SA for the first time, it says.

Neotel is in the process of rolling out an extensive next-generation network across the country, in preparation for introducing a variety of telecommunications services to different customer segments, a spokesman says.

He would not confirm how much the company has invested in the provision of leased line services in particular. He notes that most of the network elements deployed in the current wave will form the foundation of the overall Neotel network and cannot be said to have been set up for any one service.

As various elements of the network are completed, relevant products and services utilising those elements will be introduced, he says.

Winning customers

The spokesman adds the company is already in discussions with numerous potential customers regarding its leased line services.

"Most potential customers that we are speaking to are excited by the opportunity to add genuine redundancy to their existing telecoms services through the use of our independent, next-generation network," he says.

Neotel is also communicating the additional competitive advantages that its services offer to these customers, he adds.

Storm business development director Dave Gale says that, while providing outstanding service offers Neotel an opportunity to compete well with incumbent fixed-line operator Telkom, the challenge will still be of "Herculean proportions".

He explains that, while most stakeholders want an alternative service to what Telkom has offered so far, they unconsciously expect it to be better from the beginning, presenting major challenges for Neotel to meet expectations. These same high expectations, especially when it comes to services, can be used to its advantage.

Better service a must

"If Neotel were to put in its services quickly and correctly, and was responsive to faults, it would likely win over loyal [Telkom] customers," he says.

Neotel's redundancy angle is also a good one, but only if the company is using a totally separate network to Telkom, he says. If Neotel is piggybacking on Telkom's network in any way, then the competitive advantage is lost, Gale notes.

Price may also be a possible selling point for Neotel, Gale says. However, the second national operator would be silly to start a price war with Telkom too early, unless major shareholder Tata is prepared to carry Neotel for a long time before the company becomes profitable, he says.

"We do need lower-priced bandwidth though, so I'd hope their business model is aimed at selling on price to some degree," he adds.

Gale is, however, sceptical as to how far Neotel would be willing to lower price to compete with Telkom.

"The pricing of the products they have offered us so far does not give me confidence [that they would dramatically reduce price]."

Gale notes that Neotel faces stiff competition when comparing the quality of its offering to that of Telkom.

"I'm not so sure anyone has major issues with the quality of Telkom's pipes," he says.

Neotel, which introduced its wholesale international services in August 2006, has previously stated its intention to introduce voice and data services for individual consumers and small, medium and micro enterprises from April.