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Neotel growth is on track

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Neotel has shown solid growth for the year ended 31 March 2012, with a growing business and consumer base.

This is as a result of their dedicated focus on customer service, through aligning all activities to enhance client value delivered. Neotel’s drive to leverage partnership and collaboration has successfully delivered superior service to the end customer.

The group’s total revenue increased by 25% with a positive EBITDA of 11%. Achieving a positive EBITDA was one of the milestones set by Sunil Joshi, Neotel’s chief executive at the end of 2011.

Growth in the business customer segment was 50% and the consumer customer growth achieved was 110%. Neotel effectively doubled its consumer client base to 100 000 subscribers. The high growth rate is from a relatively low base. This is very high when compared to the industry growth rate of 6%.

“Neotel has indicated a clear strategy of utilising the Tata Communications global footprint in providing capacity, connectivity and services to their offering,” says Frost & Sullivan’s head of information and communication technologies, Ian Duvenage. “Tata Communications have a 100% owned ring around Africa, which provides Neotel with the ability to deliver superior services to countries along the East and West coast of the continent.”

The company have also indicated that they hope to utilise existing infrastructure belonging to other market participants in providing services to the market, as opposed to building their own infrastructure. The aim of this strategy is less capital expenditure and more focus on operational expenditure, as seen in various segments of the market.

In his quest to position Neotel as a preferred service provider, Joshi stated that their aim is to provide South African businesses with the opportunity to compete against the global players through better connectivity, faster speeds and access, lower cost.

“Looking at the current results, the release of the NeoOne offering into the market has paid off well,” notes Duvenage. “NeoOne effectively offers an all-in-one solution for business connectivity needs, which the market seem to have responded fairly well to. The company will have to continue developing innovative solutions and value propositions, in order to entice more consumers away from competitors.”

The fixed line market is moving at a rapid pace, with the market requiring industry specific customised solutions, and not the traditional one-size-fits-all approach from connectivity providers. The local market is getting increasingly competitive, with mobile operators adding various products and services to their value proposition and decreasing the cost to the end consumer.

Should Neotel wish to continue on the current growth projection, it will need to focus on clearly defined strategies for capturing market share and driving growth. Leveraging the network and capabilities of Tata Communications could be the key differentiator for driving growth in future, concludes Frost & Sullivan. The market will be watching closely as Neotel aims to capture a 2% market share.