Multinational networking company Nortel is looking for a local partner to help it diversify its revenue stream.
VP of the Africa region Yves Roux says the company accrues all its income from its enterprise division. Internationally, this accounts for 30% of its revenue, while servicing the carrier industry accounts for 70%. Roux would like to see the local split closer to 50:50.
He says this move should also aid the company to grow its enterprise offerings and consequently provide it with empowerment credentials. In addition, the partnership will see Nortel investing more in skills.
Nortel has a similar arrangement in Korea with LG that has already won it contracts. Relationships with established companies are in place in many countries, Roux says, and have aided growth.
Nortel SA has already identified a few parties with which it would like to form a relationship and expects to seal an arrangement at the end of this year or early next year, he says.
"It`s a way to penetrate the carrier market and grow our enterprise offerings."
Open doors
Traditionally, the enterprise arena is an easier sell as it has shorter lead times and repeat business. Carrier, however, is a "win or lose" game with long sales cycles and generally much larger award amounts.
Locally, the enterprise market, in terms of equipment in the voice and data segments, is worth around $300 million a year, says Roux, of which Nortel garners $20 million. He views this as an opportunity to grow the company`s share further. Globally, Nortel aims to have between 15% and 20% of this market within three years. Nortel SA`s goal is the same.
Recently-appointed country manager Magda Engelbrecht says the company will target selling end-to-end solutions in this space as return on investment for firms is higher than multiple solutions.
"People don`t really know what end-to-end value is."
In the carrier space, market liberalisation is opening doors for Nortel. It has already stated that it hopes to do business with Neotel (the second national telecoms operator) and hopes that - as the possibility arises for more players to enter the market - it could expand its base.
The company says its carrier strength lies in transmission and softswitch. It also sees 4G playing a large role in Africa where there is a dearth of copper wire. Locally, says Roux, there is also simply not enough network capacity.
On the continent, the South African office acts as a hub for sub-Saharan Africa, which is a key focus area. Says Engelbrecht: "We have an aggressive plan to attack the African market over the next year."
Roux adds that this plan is already in place and the continent makes up 20% of the South African office`s revenue.
Related stories:
New Nortel country manager
Nortel sees SA as growth market
Share