A Neotel retail store

Neotel is playing down the importance of the retail consumer market to its business, saying its main focus into the future will be on the corporate and wholesale markets. This is after the company signed up fewer than 50 000 retail subscribers.

CEO Ajay Pandey says Neotel’s ideal revenue mix is 10% from its retail consumer business, 30% from the wholesale business and 60% from the enterprise space. It does not plan to exit the retail market.

“The consumer play is very small for us,” Pandey says. “Essentially, it’s the enterprise and wholesale markets where Neotel is focusing its attention right now.”

The company has spent about R400m on its code division multiple access (CDMA) wireless network, which it uses to provide voice telephony and basic data offerings to subscribers. However, up against well-funded rivals in the mobile market, it has struggled to make much of an impact.

Pandey says Neotel has no intention of taking on the mobile operators by launching a cellular network and is comfortable with the number of subscribers it has signed up. “We will not be advertising and making a big noise in an intensely competitive consumer market,” he says.

“It’s a young business for us. It’s a small business for us consciously.”

The company, which is controlled by India’s Tata Communications, has built about 300 CDMA base stations and is still extending coverage into new areas. In the past year it has erected base stations in Port Elizabeth and Pietermaritzburg and opened new retail outlets.

It also launched its first prepaid offerings this month, though these have come under fire from analysts for offering little to persuade subscribers to switch from other networks.

Tata Communications CEO Srinath Narasimhan, who also chairs Neotel’s board, says Tata still sees “specific opportunities” in the retail consumer and small business markets, especially in providing fourth-generation (4G) broadband services.

However, Narasimhan says it’s too early to know what sort of 4G network Neotel might build, or when.  — Duncan McLeod, TechCentral

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