Vodacom acquiring Neotel: plans "progressing well"

[MickeyD]

It's actually cheaper to call a telkom landline from a neotel phone than a telkom phone.

I know.

 

[SteveO]

Orange?

And Airtel Africa...

I know they have both been trying to enter the SA market for ages. There is another smaller operator, but they dont have cash right now.Unless some ANC big boys decide to finance the deal

 

[rpm]

All local sources? No idea about any of the other big boys in Africa?

Orange a logical contender, for example, but they are more likely to look at a mobile operator like Cell C. I think the value which Neotel offers suits local mobile players well. National fibre network, spectrum, metro fibre, established international connectivity.

 

[Paul Hjul]

I've set this out before but I really do think that the spectrum argument is a red hearing here. In order to keep the Neotel spectrum allocations VC will have to operate it as a separate entity otherwise the spectrum gets to be reallocated as Neotel surrendering its licence or ceasing to exist means the return of spectrum as there is no resale and secondary market.

If VC however has a strategy to acquire Neotel and migrate the sites (but not equipment) over to Vodacom to install VC equipment 3G and LTE equipment taking just the customers and infrastructure (dumping the spectrum) the value of Neotel is inflated unless their goal is something else and here is where I strongly believe that it isn't about getting VC something it can use but about keeping something useful from somebody else - Naspers in particular. Naspers acquiring Neotel makes it possible for Naspers in whatever form (possibly as MWeb) to make some big moves in convergence and LTE.

The CDMA network is a bitch but Neotel's dual sim phones are a great step towards migration there - getting a client base to use handsets supporting a VC "roaming" sim and a neotel "landline replacement" sim means having some potentially high voice APRU customers to tide over [yes voice is dead in the long run for operators but it is a path]. There is no reason why VC can't emulate TMs Sonke product for final migration of CDMA customers IIRC LTE has a different voice paradigm altogether - packets over circuits - and you can therefore punt Neotel's prices for voice over Neotel's LTE network exclusively to existing and business customers.

Fundamentally nothing stops VC from building an LTE network on a VC owned Neotel as a "wholesale" concern - essentially Neotel does not bring out any LTE consumer offerings and wholesales to VC business and to VC through a roaming agreement. I don't foresee the facilities leasing or interconnect regulations requiring that a non-discrimination principle would require such a wholesale operator to be open to all and sundry but even if it were to arise that a Vodacom owned Neotel would have to make wholesale offerings non-discriminately to the other operators if it is properly done VC derives considerable benefit ahead of the game. This would be particularly true if the new Neotel were to wholesale to ISPs as what will then in essence happen is that you will have the MNOs which are in a league (CellC in my view is the most likely to fall off the bus) and then the ISPs which are provisioning on Fibre, DSL and LTE to differing degrees but actual converged mobility will fall to the big players VC, MTN, Telkom and a possible 4th (CellC or a Naspers player). Moreover such a Neotel holding will be open to being sold if VC needs cash or can be put up more comfortably for security and such things. Basically if I was Vodacom I would put up a big "Chinese Wall" between Vodacom and Neotel with one "gate" in the form of a predefined strategy.

 

[icyrus]

Then what's the point of this possible acquisition? If( from).....

Neotel's metro and national fibre routes would help vodacom improve their tower backhaul network. I doubt they have much interest in Neotel's business fibre connectivity products for anyone but their major clients.

Neotel could not utilise(my view) this "valuable" fibre optic network.Please excuse my ignorance on these network matters(or perhaps i'm not comprehending what i'm reading or understanding the technology) but based on the above you'd think we would have FTTX "dropping" all over South Africa(yes, even here in our dorpies).To me it just seems Neotel is merely a Metro player and that effectively takes me out of this debate.

Neotel hasn't really done much access network building and I highly doubt Vodacom would either. The problem we have locally with FTTX solutions isn't access to backhaul fibre networks.

 

[siraman]

Neotel's metro and national fibre routes would help vodacom improve their tower backhaul network. I doubt they have much interest in Neotel's business fibre connectivity products for anyone but their major clients.



Neotel hasn't really done much access network building and I highly doubt Vodacom would either. The problem we have locally with FTTX solutions isn't access to backhaul fibre networks.

Aaaah the penny drops, I'm therefore confusing "backhaul fibre network" with the "last mile network"

Thanx for clearing that up for me.

 

[SteveO]

Orange a logical contender, for example, but they are more likely to look at a mobile operator like Cell C. I think the value which Neotel offers suits local mobile players well. National fibre network, spectrum, metro fibre, established international connectivity.

Neotel is perfect for any mobile operator. They have 3 different bits of spectrum, 850, 1800 and 2600. This is a dream for any new operator. 2600 for Urban areas, 1800 for Suburban and 800 for rural.All can be back hauled via the fiber network.

Remember that CDMA is dead, any potential buyer will pull out the core and Access infrastructure and dump in WCDMA or LTE. All Neotel is really selling off is their spectrum.

 

[icyrus]

Remember that CDMA is dead, any potential buyer will pull out the core and Access infrastructure and dump in WCDMA or LTE.

I doubt there would be any need to replace Neotel's core. All the wireless access would go though.

All Neotel is really selling off is their spectrum.

And their fibre and facilities.

 

[DXL]

Vodacom is thinking strategically here guys

I think it makes sense for them to kill off the full CDMA network and use the 800MHz spectrum for LTE. One can easily move the Neotel consumers to WiMax or LTE. The main problem is the thousands of CDMA voice customers who are paying low per-minute prices - far lower than Vodacom's rates.

Vodacom can no longer sustain lower prices in the market.
Which is a fact. Vodafone worldwide is used to very high profit margins and this is all changing.
Best route now is to buy the companies offering lower prices and kill the brand and product.
At the end of the day where will u get services from.
Back to Vodacom and their high prices.

Yes they will be happy to spend R10 Billion now simply because they will reap it back next year when they charge exorbitant prices to you.

We can vote against this with the competition commission and block this deal simply on the value Vodacom provides which is nothing at the moment.

 

[MagicDude4Eva]

I think any local player taking over Neotel will be a bad thing and it will be interesting to see how this will play out in front of anti-competition commission. I agree with other sentiments, that neither MTN or VC are equipped to manage a hosting environment well (you might have the best tech, but if you have unskilled engineers and lots of red tape you are incapable of servicing customers). Since both VC/MTN have hosting businesses already (and hardly any customers), I doubt that going after Neotel hosting is lucrative.

It's more a spectrum and fibre-access question and both players have in the past done similar deals to cannibalise the original business and eventually churned customers.

 

[Bern]

If they do, they'll probably keep the fibre network and customers and kill off all the wireless networks, only keeping the sites (not the equipment) where VC don't have coverage..

By kill of wireless I assume you mean the current implementation. It would make a lot of sense for VC to get the corporate customer base from Neotel for VC Business and the fibre network, the spectrum can be refarmed as a VC wholesale or VC business entity, but can share sites, equipment and backhaul with VC normal.

I hope DD buy WBS - it will start to make this space more interesting..

If VC choose to run the Neotel frequencies as a wholesale business it could really open up a lot of business for them, especially if they are clever about using existing VC infrastructure as part of this (leasing to the wholesale company).

 

[Chevron]

I just want fibre to my house without all the fixed IP business stuff. I don't think Vodacom buying Neotel would get me that.

 

[Skerminkel]

I just want fibre to my house ...

That just about sums up all the discussions and opinions on MyBB. The rest is just noise.

 

[Stochos]

Just what the customer/consumers don't need is another anticompetitive mafia style mobile company taking over a fixed line company. Vodacom cannot compete in a competitive market; they have cartel tendencies. They will stifle competition.

 

[Marcan]

Just what the customer/consumers don't need is another anticompetitive mafia style mobile company taking over a fixed line company. Vodacom cannot compete in a competitive market; they have cartel tendencies. They will stifle competition.

+1000

 

[Paul Hjul]

By kill of wireless I assume you mean the current implementation. It would make a lot of sense for VC to get the corporate customer base from Neotel for VC Business and the fibre network, the spectrum can be refarmed as a VC wholesale or VC business entity, but can share sites, equipment and backhaul with VC normal.

I hope DD buy WBS - it will start to make this space more interesting..

If VC choose to run the Neotel frequencies as a wholesale business it could really open up a lot of business for them, especially if they are clever about using existing VC infrastructure as part of this (leasing to the wholesale company).

Yep - especially if you consider that they can move to systematically implement the Neotel LTE network (I'd keep the brand name but do a corporate overhaul) while switching off the CDMA network. The two companies are subject to mandatory facilities leasing regardless of ownership structure but being on the same page makes a lot of things easier. We should probably be sending them a bill

DD buying WBS would be interesting although I am not sure DD will do a hell of a lot of good in reality.

 

[McGuywer]

Yep - especially if you consider that they can move to systematically implement the Neotel LTE network (I'd keep the brand name but do a corporate overhaul) while switching off the CDMA network. The two companies are subject to mandatory facilities leasing regardless of ownership structure but being on the same page makes a lot of things easier. We should probably be sending them a bill

DD buying WBS would be interesting although I am not sure DD will do a hell of a lot of good in reality.

DD isn't interested anymore.

 

[Paul Hjul]

^ in Neotel or WBS (iBurst)?

The speculation is that both Neotel and WBS are on the market. VC being a front runner to acquire Neotel with DD having dropped off months ago from Neotel

 

[Bliep]

DD isn't interested anymore.

DD buying WBS sounds great though

 

[SteveO]

hmmmm DD is looking to enter the wireless game...I think we have a winner

Blue Label will buy WBS