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Neotel bodes well for the local telco and outsourcing

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While the local economy is reeling from a rise of four percentage points in the interest rate since June last year – and higher inflation due to high food and oil prices – there is some light at the end of the tunnel for the telco and outsourcing industries as Neotel, South Africa’s first converged communications network operator, begins to introduce new choices and leading-edge technology to corporates and government.

Pule Mokoena, group executive of marketing at Innovation Group, says: “Neotel is starting to roll out solutions and the market, on top of having access to another option, is expecting price reductions – which will go a long way towards increasing this country’s competitiveness.
"While we are in turbulent global economic times – which is affecting the South African economy – alternative options from Neotel might just have the knock-on affect of creating more employment in the Telco market space during the course of 2008.
"This is what we are expecting and, together with Telkom’s decision to lower rates for BPO and outsourcing operators in the country, we are bullish for the year ahead. We employed an additional 100 staff during 2007 and we believe we will match this growth, or exceed it, during 2008,” says Mokoena.
Neotel has already built an advanced fibre optic network that links locations in metropolitan areas to provide next generation network services, thereby introducing more value – but at a lower cost.
“It is great to have choice. That is what makes business tick. But to get choices – and perhaps better choices – at a lower cost, is something that has to be viewed as a major boon. I don’t believe we will see significant affects in the first two quarters of this year as the market keeps a close eye on Neotel and as they roll out more of their infrastructure, but I believe we will see a lot more buoyancy in the third and fourth quarters of the year,” says Mokoena.
Neotel also provides traditional telecoms leased line services with its NeoLink and NeoLink Global products. NeoLink Global, for instance, is unique in South Africa as Neotel customers connect ‘on-net’ directly to international destinations via VSNL’s global network.
“We are arguably going to see more and more corporates sign up with Neotel – this is going to severely challenge other operators to provide good solutions, while sharpening their pencils to bring the market lower prices. It is good news for the telco industry at large – and the economy as a whole," Moloena says.