Neotel expects to double the number of retail consumers using its network within the next six to nine months as a direct result of its launching its first prepaid services.
MD Ajay Pandey says he’d be “happy” if the company were able to double its subscriber base to 100 000 in that time. He says market research says this goal is attainable, in spite of the company having a limited marketing budget compared to better-funded rivals such as MTN, Vodacom, Cell C and Telkom.
The company is in talks with retailers and financial service companies and expects to begin selling airtime soon through Spar outlets. Already, consumers can buy vouchers at Sasol forecourts and at Neotel and Autopage outlets.
To help its consumer drive, Neotel on Monday introduced a range of new products while scrapping some of its high-end data offerings. It’s unveiled a new, entry level, high-speed Internet product that costs R99/month.
The company has also begun offering free evening and weekend on-network (Neotel-to-Neotel) calls and has upped the monthly data allowances on most of its post-paid Internet packages.
TechCentral spoke to Pandey and asked him whether Neotel has what it takes to compete in the consumer space. What follows is a shortened and edited transcript of that discussion:
TechCentral: Telkom will launch its mobile offerings this week and we’re seeing aggressive advertising from Cell C for its new broadband network. All the big players in retail telecoms are big spenders on marketing. But one doesn’t see Neotel advertising everywhere. How does Neotel compete?
Ajay Pandey: We know where our network is and where our markets are. From a marketing and brand perspective we are doing what we need to in those markets.
We are getting into community radio stations and offering promotions in local areas rather than advertising across the coverage. Our coverage is not ubiquitous as it is with the likes of Cell C or Telkom. We have to be cautious of where we market. Fortunately, we have a good sense of where our likely customers are.
TC: There is significant competition emerging and broadband prices, especially in the mobile space, are going to continue to fall. Given that companies like Telkom, Cell C, MTN and Vodacom have extensive coverage and deep pockets, does it make sense for Neotel to continue to compete in this space with its relatively limited resources?
AP: The consumer business is not going to be a headline story for us. But there is a specific requirement around some of the products we have launched.
Having said that, most of our approaches today do not involve taking broadband data and offering it on a head-on basis [with our rivals].
I am operating in a space where voice is the predominant requirement. Most of our consumer offerings clearly emphasise the voice side of the business, rather than getting into the space you’re referring to, namely a broadband or data war.
TC: But most people we speak to in the telecoms industry say voice is becoming a commodity, that in the future voice will be just another service, basically a free service carried over data. Shouldn’t you be playing more aggressively in the broadband space?
AP: We are playing in the broadband space. We are busy installing fibre in 300 buildings.
It’s a nice cliché to say voice is dead or a commodity. A lot of operators still make money from voice.
TC: So the voice market isn’t one that’s going to go away anytime soon?
AP: Absolutely not.
TC: How important is local-loop unbundling to Neotel’s future in the consumer space?
AP: We need to pursue a broadband game plan for it, so it’s important from that perspective. While we continue doing what we’re doing, local-loop unbundling would accelerate our approaches to some segments of the market.
TC: Is there a need for Neotel to become an Internet service provider, either to start one or buy one?
AP: No, not really, it’s not critical to the way we operate. We are well covered in terms of international connectivity and I don’t think we need to be an Internet service provider. — Duncan McLeod, TechCentral
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