Is Neotel battle ready?

ADSL South Africa (Broadband South Africa), 22 August 2007

This is the question one can ask after Neotel’s willingness to go in direct competition with Telkom was questioned in recent media reports.
 
We at ADSL South Africa believe that Neotel is ready and willing to take Telkom on despite ‘recents comments that Neotel would not necessarily compete directly with Telkom’ (Is Neotel scared of Telkom?, MyBroadband, 15 August 2007). Just because Neotel is not shouting it off the rooftops doesn’t mean they are not going to take Tekom head on. Is it not true that you are at your strongest when you are weak in the minds of your enemies?
 
‘Neotel’s failure to compete is given as one of the reasons for the creation of InfraCo – the state owned broadband bandwidth company – which aims to provide affordable bandwidth in South Africa’ (Is Neotel scared of Telkom?, MyBroadband, 15 August 2007). We tend to disagree, because why would Neotel be interested in a R3.8 billion undersea cable (SEACOM) that could cut Internet costs with up to 80%, if they are not willing to take Telkom head on? Any company that intends to slash Internet costs with 80% is certainly not shying away from direct competition. If direct competition means slamming Telkom’s head into the wall overnight, then Neotel is certainly guilty as charged, but since this is not the case, we should not write Neotel off after the first couple of rounds.
 
‘Neotel has previously indicated that it is aiming to differentiate itself from Telkom on more than just price, but without any residential offerings from Neotel, consumers are growing impatient with the second national operator. Even Telkom has indicated that it has adjusted its view of the effect that Neotel will have on its operations. Telkom recently told analysts that that the market has lagged on the competitive front and that it will not implement drastic price cuts any time soon’ (Is Neotel scared of Telkom?, MyBroadband, 15 August 2007).
 
One can understand if people are keen to see ‘the knight and dragon fighting it out’ but since we’re not living in the Dark Ages we have to be patient. We believe Neotel will launch their residential offerings when the time is right, and we believe it will be soon. We also believe part of Neotel’s strategy is to initially take Telkom on in a less direct way because it will certainly not make sense to come out ‘guns blazing’ while you are still building up your arsenal. Neotel is going ‘…to compete with established players like Telkom through innovative and cost effective solutions’ (Is Neotel scared of Telkom?, MyBroadband, 15 August 2007).
 
ADSL South Africa (Broadband South Africa) is convinced that Neotel will bring the fight to Telkom. Now is not the time to doubt Neotel’s ability but to support them every step of the way.