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SA opens doors to competition

Competition in the South African fixed line market was officially opened up Thursday, when the country’s second national operator, Neotel, opened its doors.

Neotel has to date been trading temporarily under the name SNO Telecommunications. Following a three year bidding process, the consortium of black empowerment group Nexus Connexion, utilities Transtel and Eskom, Indian conglomerate Tata, CommuniTel and Two Consortium, finally received its operating license in December 2005.

Previously, the lack of competition in the South African telecoms market had resulted in fixed and mobile telephone charges that are among the highest in the world, and hindering both business development and growth.

Figures released earlier this year by research firm NUS consulting found that a three-minute fixed line long-distance call in South Africa costs $0.34 compared to just $0.08 in Sweden, the cheapest country to make such calls. South Africa also proved the second most expensive country – to Belgium – in which to make fixed line national calls.

Speaking today, the company’s managing director, Ajay Pandey said that this week’s launch of wholesale services will be followed by the start of the rollout of services to businesses in December, in the major metros including Johannesburg, Pretoria, Cape Town and Durban.

Neotel expects to have its first residential customers connected by the end of March next year. These voice and data services will also start in the major metros but will gradually expand across the country, to reach up to 80 per cent of the country’s population.

Pandey said Neotel has secured access to the relevant Eskom and Transnet infrastructure, including almost 10,000kms of optical fibre backbone within metros and across the country. “We anticipate a cumulative capital expenditure of more than R11bn (£1.5bn) in the first 10 years of our operation,” he added.

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