Neotel eyes Telkom's pie

By Candice Jones for Neotel

Johannesburg, 18 Mar 2009

Second national operator Neotel has gained 6% market share against Telkom in its first two years of operation, it says.

According to Stefano Mattiello, Neotel's executive head of enterprise business, the company is pleased with the growth it has seen over the past year. “It shows there is definitely a market for an alternative.”

Neotel has plans to pull around 15% of the market from Telkom by the end of the next financial year. The 15% is an estimate Telkom expects to lose to Neotel, and the second national operator says if Telkom says 15%, then it will take 15% and more.

It shows there is definitely a market for an alternative.
Stefano Mattiello, executive head of enterprise business, Neotel

However, Neotel's ambitions don't stop at that - it hopes to gain at least 30% of the market over the first five years of operation.

To meet its target, Neotel is developing solutions around the implementation of two data centres. It is also pushing converged services, with hints the company will host international content for local streaming.

Mattiello is adamant Neotel has been a company of firsts and plans to continue growing market share by forcing competitors to continue to follow.

Neotel was the first telco to implement a next-generation network, which will make a variety of services available on a single platform. While the company claims not to compete on a price level, it is still undercutting several telcos with its voice and data packages.

In the last 12 months, Neotel has doubled the size of its network and in the next 12 months, Mattiello says, the aim is to triple the size of the network. It has a long way to go before it can service a critical mass on the consumer level. It is currently aggressively targeting the enterprise client.

However, Telkom is feeling pressure from a changing local telecommunications landscape.

In its group annual results, last year, Telkom reported a drop of more than R1 billion in its fixed-line voice revenue, to R6.3 billion for the period ended 31 March 2008, from R7.6 billion the previous year.

Telkom's number of fixed access lines also dropped from 4.6 million in 2007, to 4.5 million in 2008. Telkom's next set of results are expected soon.