Neotel clinches Vox deal

By Siyabonga Africa for Neotel
Johannesburg, 31 Oct 2008

Vox Telecom has signed Neotel as its preferred supplier of telecommunications infrastructure for enterprise customers, in a R250 million deal.

Neotel has been offering enterprise services for the last year and says it has built up a sizeable customer base in that time, with revenue in excess of R1 billion a year from enterprise customers.

“The market has been waiting a long time for an alternative to Telkom and we're delighted that we can now offer our clients the full range of Neotel's enterprise voice and data products,” says Vox Telecom CEO Doug Reed.

“This is a significant deal for everyone,” adds Reed. “For Vox, it means we're finally able to offer a complete telecommunications service, and Neotel now has direct access to our clients, which include SA's top 250 companies, as well as a large number of medium-sized and smaller companies.”

Other opportunities

The deal comes after Neotel appointed Postnet SA as a distribution partner, in May. The agreement means Neotel's consumer products will be available at Postnet outlets around Johannesburg and Pretoria.

Neotel's distribution agreement with Altech Autopage Cellular, which was signed in August, allows the VAN to market Neotel's entire product range throughout SA.

Altech Autopage Cellular MD Stephen Blewett said, during the signing ceremony, that Altech had been eyeing Neotel as a possible business opportunity since the launch of its commercial services last year.

Orion Telecom MD Jacques du Toit says Neotel is doing a lot to stimulate the telecoms industry. “Until now, we've paid Telkom R3 000 per month for a 128k link. Neotel offers a 2MB link for the same price. No one in their right mind is going to stay with Telkom if they can get that amount of bandwidth for the same price.”

Making its mark

Frost & Sullivan analyst Lindsey Mc Donald says the deal is an indication of Neotel's efforts to build up its supplier network. 2008 has been characterised by product launches and agreement announcements, and this is likely to continue into 2009 as well, she explains. Establishing routes to market is essential for Neotel's quick success in SA, Mc Donald adds.

IDC analyst Richard Hurst says the industry can expect to see more deals like the Neotel/Vox Telecom licence agreement. He explains that VANs will find it beneficial to invest in companies, such as Neotel, which have an established network.

“This is a win-win situation because they will no longer be beholden to Telkom's network,” he adds.

Frost & Sullivan does not expect to see hordes of Telkom clients suddenly deserting it as a direct result of the announcement. Mc Donald says the deal is another indication of the level of choice telecoms clients now have.

“It will, however, mean Telkom is further challenged to remain competitive in this market with well bundled services at cost-effective prices.”