Neotel reaches profitability

NEOTEL yesterday said it had reached the milestone of profitability after paying the interest on its debt for the first time since it was allowed to start competing against Telkom.

NEOTEL yesterday said it had reached the milestone of profitability after covering its interest payments for the first time since it was allowed to start competing against Telkom in SA’s fixed-line phone market six years ago.

The unlisted company did not provide detailed financial results, only percentage changes, saying its revenue had grown 12%.

Neotel said it had grown business customers 29% and retail customers 52%. It would launch the high-speed long-term evolution (LTE) network in the coming months starting in Gauteng. The LTE network has the potential to operate at more than double the speed of any existing mobile connection.

Neotel CEO Sunil Joshi said the network would be launched early in the second half of the year. He said customers could expect “world-class internet, voice and video solutions. We will enable them to grow their business”.

Neotel joins competitors Vodacom, MTN and Cell C, which have already launched LTE networks commercially.

Mr Joshi said Neotel was in talks with manufacturers for LTE-enabled devices. The lack of available devices is one of the factors that could hamper the take-up. “Access to devices is a challenge. We are talking to equipment manufacturing” to bring LTEenabled devices to the market.

Neotel plans to utilise about R500m in the financial year ending next March.

“In the period under review, we invested more than R500m in capital expenditure, and now have access to over 15,000km of national long-distance fibre and approximately 8,000km of fibre in major metros,” said Mr Joshi.

In the year to March, the company grew revenue by 12% after an increase in new customers. Its consumer clients grew 52% to 152,000 with about 70% of those customers being in Gauteng. Its corporate customers rose 29%.

According to the company, the fixed-line telecom market in SA is projected to grow at 1.4% a year until 2018.

Neotel, across all business units, is growing at more than eight times this rate. “Amidst global uncertainty and a tougher competitive environment, Neotel has outperformed the local industry. We are extremely thankful to our customers for their support of competition in SA and for affording Neotel the opportunity to add value to their business,” said Mr Joshi.

Neotel would focus on growing its small to medium-size business segment and would launch products targeting that market. “We will come with simplified products for that market. We aim to drive greater growth (from the small to medium-size market segment),” said Mr Joshi.