Neotel, SA's second national operator, aims to return a net profit by the end of the 2014 financial year, after becoming profitable at an operating level in the second quarter of this year.
Neotel, which is in the gestation phase of its business, has been running at a loss for a few years, but expects to reverse this situation.
In the year to March, based on Tata Communications' latest annual report, the company's net loss widened to R1.9 billion. In the previous year, it reported a R1.1 billion loss.
Yesterday, MD and CEO Sunil Joshi told a media roundtable the company grew revenue 25% in the first six months of the year, compared with the same time last year. He says the company expects revenue to continue growing and it will keep focusing on costs.
In the first three months of the year, Neotel grew earnings before interest, tax, depreciation and amortisation (Ebitda) by 50%, and gained 119% on this line in the second quarter. The company is now Ebitda positive, said Joshi.
strategy is “sound”, he added. The company has been investing in its network, and revenue growth is “following”.
Big spender
It is on track to spend between R500 million and R600 million on its network this year, Joshi said.
Neotel has spent R3.5 billion on its network in the five years since its launch, he noted. The company has laid 6 700km of fibre and has access to all of the undersea cables connecting SA to the rest of the world.
Neotel, which launched its consumer offering three years ago, grew its subscriber base 40% in the first half of the year to 70 000. Its enterprise business grew from 1 300 to 1 600 customers in the same time.
In the second half of the year, the company will focus on growing market share and remaining profitable at an Editda level, said Joshi.
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