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Staff departures at Neotel
- Thread starter Jan
- Start date
The Elder Troll
New Member
TofuMofu
Honorary Master
LOL! True that
On topic though. I signed up for a Neotel link at home (Premium or something like that). The wireless link for R999 uncapped. They declined it based one what I don't know and recommended the 15GB to me...I was looking for an alternative to Telkom with whom I have a 60GB ADSL package and pay way more for it than R999...yet Neotel thought my money was no good for the uncapped.
So I declined that and just waited a month for Telkom to fix my line. At least I know I get what I want and not something they tried to push down my throat...
From then I knew Neotel was in for hard times. You can't be picky in business...
PS. That was about 2 or more years ago. I know that package doesn't exist anymore.
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In Neotels defence the ‘no action’ is because ICASA is procrastinating. To take action is horrendously expensive and you want a stable regulatory framework. If ICASA shifts the goalposts after Neotel has ‘taken action’ and spent money, Neotel will go down the tubes.
neotel could take the market with prepaid data if they had packages that were good my R200 a gig the fail therre call rates on prepaid are not bad but data there guy that do the packages are out of this world. (Reason Telkom does not do prepaid adsl)
ads
Senior Member
I'm sure they believe that, but the facts say otherwise. In many ways, they are in the same situation as Neotel - their margin is squeezed by the behaviour of a monopoly, who has no intention of letting up, and they have a Big Brother (appropriate term, if you think about it) who can continue to fund their losses for years. What has become really challenging for them is that their margin dropped for every subscriber they migrated from dial-up to ADSL (we all know Telkom takes most of the money).
I'm intrigued by your second comment - that they wouldn't be doing what they were doing if they weren't making a profit. Given that Naspers shareholders are paying for this, that may be true in the long term, but certainly not in the short term. As with any business (Neotel included) investors tolerate short term losses precisely because of potential future profits. I just don't see where M-Web's future profits would come from - they own no real infrastructure, they are essentially dependent on Telkom for their primary margin, and they are in a highly competitive industry where others can undercut them, even if they fail. They look more like a cost centre for DSTV.
Naspers is trying to reposition M-Web as part of their "content" portfolio, so that they don't have to report on ISP losses separately. The issue that Naspers faces is that it's a listed entity (just like Tata), and that shareholders will punish it if it doesn't sort out M-Web eventually.
M-Web's current business model is interesting, but I wouldn't describe it as game-changing, or even as hugely profitable in the long-term. If you are a Naspers shareholder (which I suspect you aren't or you'd have read their annual reports), you're better off supporting their Chinese adventures (which also blow hot and cold, but have good upside), and hoping that they can roll as much of M-Web as they can into their (profitable) pay TV portfolio. They would be a lot better off selling their subscriber base to a larger telco (like Neotel, perhaps) with infrastructure to off-set the growing massive connectivity costs - at least that way M-Web's international services wouldn't drop every time a wave breaks on the beach at Mtunzini.
I'm sure that MWeb is nowhere near as desperate as Neotel is.
Besides, Neotel would quickly alienate the majority of those subscribers.
Remember that most of MWeb's ADSL uncapped subscribers are not tied into contracts with MWeb and can switch to another ADSL ISP any time, whereas Neotel's business model is based on tying its customers into two year contracts.
Neotel's entire business model and approach to doing business with consumers is VROT!
The sooner Neotel realizes it is the new Sentech and should only be doing wholesale, the better things will be for Neotel and consumers alike.
MickeyD
RIP
Great post! It's really interesting how Naspers re-aligned MWeb into their "Pay-TV" portfolio by moving it away from their "Internet" portfolio. For the 1HY11 results they have re-stated all their numbers for comparative purposes; only problem is that MWeb is now lost amongst the huge Multichoice numbers.
The only hint of a problem lies on page 27 of their results presentation:
I hear that Neotel detests Sentech and are bitching about the bandwidth that ICASA has allocated to Sentech who are just sitting on it. In Neotel’s opinion, they [Neotel] could use the allocation more productively and are agitating for ICASA to reallocate the bandwidth away from Sentech to providers who would utilise it more productively – not necessarily to themselves (although they would prefer that obviously). Hence the ‘taking action’ issue – laying fibre optic cable, digging-up streets, laying out bribes, setting aside contingency funds for the inevitable union hassles and enduring the bad PR is an expensive exercise. They must be sure that ICASA won’t change the goalposts. This is an expensive one-shot deal.
saffakanera
Expert Member
- Joined
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Agreed.
Most likely true, but also only half the story.
The "use it or lose it" campaign was never pioneered by Neotel, every player in the wireless broadband game wants the spectrum that Sentech has been sitting on.
Besides, Neotel has adequate WiMax spectrum alongside Telkom, and neither Sentech nor Telkom nor Neotel are actively rolling out WiMax to the masses. All of those should lose the WiMax spectrum they are sitting on and not properly using for the benefit of the majority of South Africans. If VANS had access to the spectrum some would actively gather up enough venture capital to run viable businesses.
It also looks like Sentech has recently illegally rented out that spectrum to a WISP in contravention of the license received from ICASA for that spectrum (my guess is in a misguided attempt to stave off the possible future threat from "use it or lose it").
Neotel might despise Sentech, but neither one of them realizes just how alike they really are when it comes to dealing with consumers.
FatBoySlim
Expert Member
Neotel dug their own grave, they had an opportunity, most people had hope for Neotel and would gladly move over. But they were too slow off the mark!!!
Roman4604
Executive Member
You're assuming they are making a loss at an opertaional level. Remember their own network/service is only 10 months old, barely out of the starting blocks and its inevitable there would be some capital startup costs.
Also Telkom's sway on local ISP's profitability is not as absolute as you paint. Regional access via IPC is but one component of local DSL infrastructure costs. The other two main ones, national & international transport should see dramatic reductions over the next 12 months with new options coming to the wholesale market.
Even the high IPC costs are not an insurmountable obstacle as IPC is a packetised/multiplex service which behaves favourably with sufficient economies of scale. Maintain aggressive growth and the synergy of scale will eventually reduce the per-user requirement/cost to reasonable levels.
Even if Neotel had the appetite to buy MWEB's base (incl. a fat premium for potential/projected growth based on current performance), what would they do with them?
Put them on to their CDMA network? Now that would be an exciting disaster movie to watch.
Wake UP!
Hey guys and gals,
If a CEO's contract is about to end then it should not be a huge surprise when.. heyshoowow... it ends.
When it comes to staff departures.. the PR person and Mike Silber leaving for a better opportunity is hardly a slight on Neotel.
And any person with a reasonable knowledge of financial accounting would know that you don't setup a capital intensive business and recoup a positive EBITDA in the first five years.
Neotel has failed the consumer by providing a crappy CDMA 2000 standard for a developing market, and not providing Fibre to the home (but that would be inordinately expensive considering LLU isn't in place yet.)
Stop jumping on the panic bandwagon and enjoy a little moment of commonsense.
Hey guys and gals,
If a CEO's contract is about to end then it should not be a huge surprise when.. heyshoowow... it ends.
When it comes to staff departures.. the PR person and Mike Silber leaving for a better opportunity is hardly a slight on Neotel.
And any person with a reasonable knowledge of financial accounting would know that you don't setup a capital intensive business and recoup a positive EBITDA in the first five years.
Neotel has failed the consumer by providing a crappy CDMA 2000 standard for a developing market, and not providing Fibre to the home (but that would be inordinately expensive considering LLU isn't in place yet.)
Stop jumping on the panic bandwagon and enjoy a little moment of commonsense.
zamedic
Well-Known Member
Well, I guess I must be one of the few happy Neotel Custoemrs out there... My only complaint is that they only have a 5Gig package, but other than that I love them.
Speed is normally very good, I play WOW and EVE no problem.
Telkom would be able to give me a 384k max, thats after their port project is finised in a years time. In terms of service, I need to know where the towers are in my area. They replied a day later with the GPS co-ordinatges for the 3 clostest towers.
I wonder how many people on here who bash Neotel are actually (ex)customers?
Speed is normally very good, I play WOW and EVE no problem.
Telkom would be able to give me a 384k max, thats after their port project is finised in a years time. In terms of service, I need to know where the towers are in my area. They replied a day later with the GPS co-ordinatges for the 3 clostest towers.
I wonder how many people on here who bash Neotel are actually (ex)customers?
MickeyD
RIP
You're missing the boat... it's not only those few that are leaving. They are the lucky ones whose contracts are coming to an end. We are referring to those workers about to be retrenched.