Neotel's preparing for war

ADSL South Africa (Broadband South Africa), 17 December 2006

Neotel (SNO) has secured R2 billion in local finance for its ‘war chest’ in order to extend its services to more customers. The money will go towards the expansion of Neotel’s infrastructure network.

The Development Bank of Southern Africa, Investec Bank, the Industrial Development Corporation and Nedbank Capital must be smiling. They furnished Neotel with R2 billion in a loan agreement that was described as “…a notable achievement” by Mike Peo of Nedbank Capital. Ajay Pandey, Managing Director of Neotel, made it clear that this cash injection would take them where they want to go although Neotel would ultimately need R8.5 billion to fund its operations.

Has Neotel made any progress?

Neotel has definitely made some progress…

• It “operates 1300km of fibre optic cable in six cities after buying that network from Transnet for R256m” (Neotel raises R2bn in local loan finance, Lesley Stones, 2006).

• “…also has access to a government-owned high-speed network built by Eskom and Transnet” (Neotel raises R2bn in local loan finance, Lesley Stones, 2006).

• Supplies international bandwidth to Cell C, Vodacom, MTN and others.

While Neotel’s infrastructure network is currently not even close to the size that’s needed, its clearly making progress by securing much-needed funds that’s necessary for the building of such a network.

What can be expected from Neotel within the next year?

Large corporations can expect to make use of Neotel’s bandwidth by the first quarter of 2007 while residential customers “should be able to place fixed-line calls or access the internet via Neotel by the second quarter of next year, as long as the street in question was in a main urban area” (Neotel raises R2bn in local loan finance, Lesley Stones, 2006).

ADSL users in South Africa can expect faster and cheaper ADSL broadband services from Neotel. Pandey made it clear in a recent Moneyweb interview that “…the pricing of some of the telecom options in South Africa is very high. I still believe, still feel and still maintain the fact that they can be at least be one-third of what they are today,…” (Affordable broadband from Neotel, MyADSL, 2006).

ADSL South Africa(Broadband South Africa) wishes Neotel the best of luck in its ongoing ‘preparations for war’.