The SNO is finally here. So what?
The second national operator has finally been launched under the name Neotel. But will we, the consumers, see a reduction in telecommunications costs, or is Telkom simply too well established?
Bruce Whitfield:
Well Mandy Weiner from the Eyewitness News team has been to the official launch of the second national operator, the company which is an amalgamation of different parties, going to be called Neotel; plans to invest about R10-billion over the next ten years to expand its services. Mandy, you were at the function today, these things tend to come with lots of bells and whistles and razzmatazz, what was it like?
Mandy Weiner:
Absolutely Bruce, there were a lot of bells and whistles today. It was hosted at the Kyalami theatre on the track and there was great food, great drama, lots of pre-recorded presentations, artistic displays and when they did reveal the name, the logo of Neotel, there was much cheer and applause from the top businessmen and women who were in attendance today.
Bruce Whitfield:
The big question really is whether or not the razzmatazz, the glitz, the glamour is going to actually be met with service delivery which is what South Africans have been gagging for for the last four years, ever since the seller was announced.
Mandy Weiner:
Absolutely. Well Bruce, and Neotel’s MD is definitely optimistic and he promised great things today. Now he says that Neotel wants to become the provider of leading edge telecoms in South Africa and to reduce the cost of doing business to bring the benefits of communication to the second economy and of course, they have also promised to invest well over R10-billion and into the economy. So there is definitely big talk from the company. I asked the MD whether or not, South Africans should be optimistic and to what extent and how and when they can expect to feel the influence of the SNO.
Ajay Pandey:
Let me just say, that even before we have launched, we realised six to eight weeks, if some of them have been monitoring the prices of the bandwidth, there has been a downward trend already in anticipation of our arrival.
The second thing is that some of the stuff that we have been doing, in terms of international wholesale services, I personally feel that we have on the table, a very attractive set of options and prices. How soon some of these are translated back in the hands of the actual user, is a subject of discussion, which we can probably talk about after we have engaged a little bit more with some of our current customers.
Your last question was, how hopeful should South Africans be? My answer is that they should be very hopeful, if not confident of the fact that with the advent of competition, it is not only the prices. It is also about the customer services which they will see.
The question is about timing, and I still stand by what I presented to say, early 2007, South Africans, the end customer will directly get the benefits from us. Between now and then, I do hope, and I sincerely wish that one of the benefits that we are placing on the table will finally get passed on through our wholesale customers to our retail customers as well.”
Bruce Whitfield:
Ajay Pandey, the MD of Neotel.
Mandy Weiner:
Officially it is called Neotel.
Bruce Whitfield:
Thank you Mandy Weiner very much. Dobek Pater is the Telecoms Analyst at African Analysis and he joins us on the line now. Neotel, finally being launched Dobek, and big promised coming out of the managing director Ajay Pandey this evening. He is saying that they promised to have retail services by early 2007. Do you think they will actually meet those targets?
Dobek Pater:
I would think so yes, I would hope so certainly, because those targets have been moved a few times and the market expected them one or two years back. So they will obviously start the launching services and I am confident that they will finally manage to launch retail services as well, starting sometime, quarter one or quarter two, next year.
Bruce Whitfield:
Explain the difference to me please Dobek, because you have got the whole sale market and then the retail market. What is the difference between those two?
Dobek Pater:
Well the difference is, like any market I suppose, for any product or services. Wholesale would be issuing you with a network system. You would sell those services to other providers in the market. So for instance, you would sell wholesale internet services to an internet service provider who does not have access to a global network itself.
They in turn would package it into some sort of retail offering to the end user, the customer. You as a communications operator could be an operator and a service provider in one, as Telkom is for instance, so they would offer wholesale services to their competitors and also on the basis of the underlying network, offer retail services to the market in competition with other operators and service providers in the market.
That is the whole reason behind trying and separate within companies, various vertical segments of those companies, separate wholesale from the retail division.
Bruce Whitfield:
Absolutely, so now, they certainly have got a couple of corporate clients sown up, they have got those linked up as well. I suppose an extensive marketing drive, an expensive marketing drive is going to have to be engaged in in the early part of next year, if in fact they do meet their target. They are going to have quite a tough job, getting one over on Telkom though. Telkom is hugely established, the fact that Neotel has been so late in coming to market and much later than expected and they have given Telkom a huge advantage.
Dobek Pater:
Well certainly, it has a huge advantage and we look at, just globally, at case scenarios, they come and operate those in just about all the markets. On the one market that I am aware of, the second network operator actually managed to get a substantial market share. Apart from Telkom itself, which as you indicated, plays across all market segments and is the biggest player in the South African market, we are increasingly being faced with a more competitive market, so the SNO is not only coming to compete against Telkom, it is actually coming to compete against the big ISP of internet solutions, DataPro, Horizons, for instance and that competition will increase.
And also, increasingly, we have seen competitive products from the mobile operators and the likes of IBurst and Sentech as well, wireless internet service provision for instance. So it is a lot more congested market than just looking at Telkom itself.
Bruce Whitfield:
So all of it substantially delayed, but ultimately good news for you and me?
Dobek Pater:
Well we hope so, we still need to see what sort of impact the SNO or Neotel will have on the market itself. They are banking on the fact that they have a partnership with the SNO out of India, which owns one of the four, five major global internet works and telecommunications networks and that will in turn, allow them to provide perhaps less expensive higher quality services to the market, that proves to be a big advantage in a sustainable advantage versus other operators in this market, remains to be seen.
Bruce Whitfield:
Dobek Pater, thank you very much indeed, he is the Telecoms Analyst at African Analysis summarising that for us very nicely.
Let’s talk to Ajay Pandey who is the managing director of Neotel, and a big launch today Ajay. Are you glad it is out of the way and now you can focus on providing telecommunications and services?
Ajay Pandey:
Yes Bruce, we just launched our new identity today and we launched one of the three plans today that was international wholesale, so that should go down with the South African consumers.
Bruce Whitfield:
But certainly we are hoping and you said it today at your presentation that early 2007, I should be able to pick up my telephone at home, my Neotel telephone at home and phone you at your home on a Neotel telephone. Is that really a realistic prospect from your perspective?
Ajay Pandey:
We would like to have that kind of readiness, in fact, I would even go to the extent of saying that our desire is that by early 2007, people like you and I should be able to pick up phone in a box, maybe from one of the supermarkets, one of the place where you and I buy daily needs. And I think that is the time we will really say that we have been able to achieve in true sentence for the people of South Africa, they can pick up a phone, take it home, connect to the internet through a wireless modem and I think that is where it should all begin and start changing the lives.
Bruce Whitfield:
You want 15 percent of Telkom’s fixed line revenue in four year's time. Will that be enough to sustain the business model or something that will require some quite considerable scale in the South African market?
Ajay Pandey:
No, let me just clarify, I never said that I want that much of business, I said somebody else has kept the target for me and the least which I can do is to go the organisations to take that business. It certainly is not going to be enough. We have to move forward like a huge telecom company, we require huge investments. So I won’t say that, that is enough or that is less or that is good enough.
Bruce Whitfield:
Ajay Pandey, we have lost him unfortunately in the system, but thank you very much to him, the managing director of Neotel.
The second national operator has finally been launched under the name Neotel. But will we, the consumers, see a reduction in telecommunications costs, or is Telkom simply too well established?
Bruce Whitfield:
Well Mandy Weiner from the Eyewitness News team has been to the official launch of the second national operator, the company which is an amalgamation of different parties, going to be called Neotel; plans to invest about R10-billion over the next ten years to expand its services. Mandy, you were at the function today, these things tend to come with lots of bells and whistles and razzmatazz, what was it like?
Mandy Weiner:
Absolutely Bruce, there were a lot of bells and whistles today. It was hosted at the Kyalami theatre on the track and there was great food, great drama, lots of pre-recorded presentations, artistic displays and when they did reveal the name, the logo of Neotel, there was much cheer and applause from the top businessmen and women who were in attendance today.
Bruce Whitfield:
The big question really is whether or not the razzmatazz, the glitz, the glamour is going to actually be met with service delivery which is what South Africans have been gagging for for the last four years, ever since the seller was announced.
Mandy Weiner:
Absolutely. Well Bruce, and Neotel’s MD is definitely optimistic and he promised great things today. Now he says that Neotel wants to become the provider of leading edge telecoms in South Africa and to reduce the cost of doing business to bring the benefits of communication to the second economy and of course, they have also promised to invest well over R10-billion and into the economy. So there is definitely big talk from the company. I asked the MD whether or not, South Africans should be optimistic and to what extent and how and when they can expect to feel the influence of the SNO.
Ajay Pandey:
Let me just say, that even before we have launched, we realised six to eight weeks, if some of them have been monitoring the prices of the bandwidth, there has been a downward trend already in anticipation of our arrival.
The second thing is that some of the stuff that we have been doing, in terms of international wholesale services, I personally feel that we have on the table, a very attractive set of options and prices. How soon some of these are translated back in the hands of the actual user, is a subject of discussion, which we can probably talk about after we have engaged a little bit more with some of our current customers.
Your last question was, how hopeful should South Africans be? My answer is that they should be very hopeful, if not confident of the fact that with the advent of competition, it is not only the prices. It is also about the customer services which they will see.
The question is about timing, and I still stand by what I presented to say, early 2007, South Africans, the end customer will directly get the benefits from us. Between now and then, I do hope, and I sincerely wish that one of the benefits that we are placing on the table will finally get passed on through our wholesale customers to our retail customers as well.”
Bruce Whitfield:
Ajay Pandey, the MD of Neotel.
Mandy Weiner:
Officially it is called Neotel.
Bruce Whitfield:
Thank you Mandy Weiner very much. Dobek Pater is the Telecoms Analyst at African Analysis and he joins us on the line now. Neotel, finally being launched Dobek, and big promised coming out of the managing director Ajay Pandey this evening. He is saying that they promised to have retail services by early 2007. Do you think they will actually meet those targets?
Dobek Pater:
I would think so yes, I would hope so certainly, because those targets have been moved a few times and the market expected them one or two years back. So they will obviously start the launching services and I am confident that they will finally manage to launch retail services as well, starting sometime, quarter one or quarter two, next year.
Bruce Whitfield:
Explain the difference to me please Dobek, because you have got the whole sale market and then the retail market. What is the difference between those two?
Dobek Pater:
Well the difference is, like any market I suppose, for any product or services. Wholesale would be issuing you with a network system. You would sell those services to other providers in the market. So for instance, you would sell wholesale internet services to an internet service provider who does not have access to a global network itself.
They in turn would package it into some sort of retail offering to the end user, the customer. You as a communications operator could be an operator and a service provider in one, as Telkom is for instance, so they would offer wholesale services to their competitors and also on the basis of the underlying network, offer retail services to the market in competition with other operators and service providers in the market.
That is the whole reason behind trying and separate within companies, various vertical segments of those companies, separate wholesale from the retail division.
Bruce Whitfield:
Absolutely, so now, they certainly have got a couple of corporate clients sown up, they have got those linked up as well. I suppose an extensive marketing drive, an expensive marketing drive is going to have to be engaged in in the early part of next year, if in fact they do meet their target. They are going to have quite a tough job, getting one over on Telkom though. Telkom is hugely established, the fact that Neotel has been so late in coming to market and much later than expected and they have given Telkom a huge advantage.
Dobek Pater:
Well certainly, it has a huge advantage and we look at, just globally, at case scenarios, they come and operate those in just about all the markets. On the one market that I am aware of, the second network operator actually managed to get a substantial market share. Apart from Telkom itself, which as you indicated, plays across all market segments and is the biggest player in the South African market, we are increasingly being faced with a more competitive market, so the SNO is not only coming to compete against Telkom, it is actually coming to compete against the big ISP of internet solutions, DataPro, Horizons, for instance and that competition will increase.
And also, increasingly, we have seen competitive products from the mobile operators and the likes of IBurst and Sentech as well, wireless internet service provision for instance. So it is a lot more congested market than just looking at Telkom itself.
Bruce Whitfield:
So all of it substantially delayed, but ultimately good news for you and me?
Dobek Pater:
Well we hope so, we still need to see what sort of impact the SNO or Neotel will have on the market itself. They are banking on the fact that they have a partnership with the SNO out of India, which owns one of the four, five major global internet works and telecommunications networks and that will in turn, allow them to provide perhaps less expensive higher quality services to the market, that proves to be a big advantage in a sustainable advantage versus other operators in this market, remains to be seen.
Bruce Whitfield:
Dobek Pater, thank you very much indeed, he is the Telecoms Analyst at African Analysis summarising that for us very nicely.
Let’s talk to Ajay Pandey who is the managing director of Neotel, and a big launch today Ajay. Are you glad it is out of the way and now you can focus on providing telecommunications and services?
Ajay Pandey:
Yes Bruce, we just launched our new identity today and we launched one of the three plans today that was international wholesale, so that should go down with the South African consumers.
Bruce Whitfield:
But certainly we are hoping and you said it today at your presentation that early 2007, I should be able to pick up my telephone at home, my Neotel telephone at home and phone you at your home on a Neotel telephone. Is that really a realistic prospect from your perspective?
Ajay Pandey:
We would like to have that kind of readiness, in fact, I would even go to the extent of saying that our desire is that by early 2007, people like you and I should be able to pick up phone in a box, maybe from one of the supermarkets, one of the place where you and I buy daily needs. And I think that is the time we will really say that we have been able to achieve in true sentence for the people of South Africa, they can pick up a phone, take it home, connect to the internet through a wireless modem and I think that is where it should all begin and start changing the lives.
Bruce Whitfield:
You want 15 percent of Telkom’s fixed line revenue in four year's time. Will that be enough to sustain the business model or something that will require some quite considerable scale in the South African market?
Ajay Pandey:
No, let me just clarify, I never said that I want that much of business, I said somebody else has kept the target for me and the least which I can do is to go the organisations to take that business. It certainly is not going to be enough. We have to move forward like a huge telecom company, we require huge investments. So I won’t say that, that is enough or that is less or that is good enough.
Bruce Whitfield:
Ajay Pandey, we have lost him unfortunately in the system, but thank you very much to him, the managing director of Neotel.
