India-based telecoms giant Tata Communications says Neotel's loss has widened in the year to March, as the company is still in its “gestation” phase.
The company says in its latest annual report for the year to March that its consolidated net loss includes $123.71 million - or R966.92 million - from its share in SA's second national operator.
During the year to March, Tata had an effective interest in Neotel of 49%, taking Neotel's total loss to around R1.9 billion. In the previous year, it reported a R1.1 billion loss.
Neotel is targeting profitability at the earnings before interest, depreciation, tax and amortisation line this financial year, recently appointed CEO and MD Sunil Joshi has said. That means Neotel will be profitable on a cash basis by next March.
Tata explains Neotel requires investment to establish the required capabilities.
Neotel was established as SA's second national operator in 2005 and currently employs almost 1 000 people. Tata initially had a 26% stake in the unit, but has subsequently increased this to 64.5%, making Neotel an incorporated subsidiary from 11 April.
network and customer reach expansion phase, which has resulted in the losses. As the business scale of Neotel increases, the company expects the losses from Neotel to reduce,” Tata says.
“We remain confident that the company's strategy is sound and that the direction that the company is taking will be beneficial to the company and its stakeholders as we move forward,” states the annual report.
Tata's board has approved an investment limit of up to $395 million, or about R3 billion, in Neotel, it says.
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