Optimising the Cost of Business
In this issue of CEO Magazine, we speak to Sunil Joshi, the managing director and chief executive officer of Neotel, South Africa’s first ever converged telecommunications service provider. He shares the journey of the company’s first six years in operation and how it has held its own in an uncertain global economic climate to become the only choice for organisations intent on optimising the cost of business through the use of innovative new technologies.
In an uncertain global economic climate, Neotel achieved a major milestone of being full-year EBIT (Earnings before Interest and Tax) positive for the first time since the company launched six years ago. What do you attribute this success to?
Neotel’s journey has not been different to that of any other start-up company. We opened our doors for business a little over six years ago in August 2006 with just two people, a laptop and a spread sheet. Ever since that time, we continued to build on the
by Andrew Ngozo
LEADING EDGE | Neotel
necessary infrastructure in order for us to expand our footprint. Fibre was our key strategic focus from the beginning. Over the last six years, we have been deploying fibre across South Africa to enable us to provide services to our target businesses and retail customers across the country. Significant investment went into the infrastructure. The next step was to build services - predominantly Internet Protocol (IP) and converged services. All those are processes that take time. Six years later, Neotel is an organisation with a thousand employees, really delivering value to our clients in South Africa! As a business, Neotel has had its ups and downs but also its glory days. It has taken us 6 years to get an EBIT positive result in the 2012/2013 financial year and we are proud of our achievements.
The South African fixed line telecommunications market is projected to grow at 1.4% per annum until 2018. However, Neotel, across all business units, is growing at more than eight times this rate. What is your secret?
We are indeed growing at eight times the industry growth rate. For instance, in the year that just passed, Neotel’s revenue grew by 12%. Our growth is largely driven by a range of network and managed services and the mandate to provide a real choice to our customers. There are two important factors in this regard: first, our prime focus centres on optimising the cost of communications. This effectively means that we help businesses and retail customers to save money. Second, we are leveraging on innovation and technology to improve productivity, without comprising quality, and driving change in the way in which businesses and retail customers communicate and collaborate. Both these aspects add immense value to our customers.
Therefore, Neotel is gaining market share. In the past year, our business customer base grew by 29% while our retail and small enterprise services base reported a 52% growth. This is testimony, not only to the services that are available from Neotel, but also to the value that Neotel delivers. I should at this point, mention that the support received from our customers and the dedication of our employees has been tremendous. The staff at Neotel are passionate about the ‘Neotel Inspiring Possibilities’ brand. We continuously strive for excellence and the provision of meaningful services to our clientele.
One cannot help but notice that there is a certain energised vibe among your members of staff. Is there any particular reason for this ambiance?
Team Neotel is totally engaged in living the Neotel dream and brand. The context of ‘orange’ in our branding signifies a double dose of sunshine; which is a fresh approach to the way things are done and to do things differently. We may not have vast surpluses of human and financial resources but the entire team at Neotel, and our partners, are fully dedicated to offering a service that delivers value and is meaningful to our customers. That, among other things, keeps us motivated. From a culture standpoint, it is always about a ‘can do’ attitude in the midst of challenges to grow in a highly competitive environment. We are always delighted when a customer comes to us and says ‘Well done’. This keeps the team going and wanting to do more.
How does Neotel marry the technical side of fibre optics with the soft side of things for ease of use and understanding for the customer?
As a technology company, we have many engineers and we tend to have too many acronyms as compared to other industries. However, our job is to simplify (for the end user), the complexity behind the various technologies we employ. It does not matter whether we are dealing with a larger business or a retail customer, ultimately, people want to communicate and collaborate by leveraging reliable technologies. We therefore try to deliver our services in such a manner that they are simple, easy to use and enable our clients to grow their businesses. Although it’s tough to simplify technology, we are making good progress. Thanks to the Internet, the customer is also well informed to make the best choice. Over the last six years, Neotel has evolved: we are no longer an alternative for businesses and consumers but a real choice. Our customers see value in our services in a credible and reliable way.
From a business perspective, it is one thing to get the momentum going and it is quite another to keep it so. What are your thoughts on how you intend to maintain your standards and keep the upward trend on track?
The key is to keep raising the bar for ourselves and never stop building on the momentum we have in the business. We serve a clientele that ranges from those that require standard voice, data and internet solutions to those who require new, innovative services to grow. We recently launched a service called Broadband Booster (Broadband on Demand). This allows customers to use increased Broadband bandwidth as and when they need and only for the specific time during which they require the services. For example, an average customer who regularly uses a 10 megabyte service may decide they want to use two megabytes for one hour at some point. In that event, they can go to our portal and select that particular boost and only get billed for the one hour. Increasingly, we are transforming our services to a pay-as-you-go mode. Innovative technologies such as the portable landline (NeoSmart) which allows one to receive calls to their office number even when they are not in the office, are some of the ways in which we are increasing value to our SMB customers. We enable our customers to communicate and collaborate within their ecosystem, with their suppliers and with their customers.
What is your mid-term perspective on how the local telecommunications industry will shape up?
Within the telecommunications industry, IP and convergence of voice, data and video are significant trends. Within the ICT sector the ‘i’ (information) and ‘t’ (telecommunications) are also converging as well. The industry is as a result, faced with the task of finding the best ways to provide ubiquitous service levels to the customer that enables them to benefit from the services rather than be bothered by the specific technologies behind the solutions. Neotel and the industry are hard at work, investigating ways to offer simplicity of the end service to customers. In the near future, South Africa will witness a lot more partnerships and consolidation within the market and across industries. Companies need to start thinking in terms of optimising their core structures, cost of communications and infrastructure, while looking for growth opportunities. Businesses that adopt this approach will certainly thrive and be successful.
At Neotel, we are looking at both sides of the coin: We examine how do we help our customers reduce the cost of operations especially in the realm of telecommunications and IT? We also look at where we can help them expand, be it in South Africa or within the continent or other emerging markets. As a service provider, Neotel is uniquely positioned to offer connectivity across 300 cities in 200 countries spanning six continents. All this can be done from one central location right here in South Africa by virtue of the fibre optic infrastructure we built and the submarine cable assets we have. Obviously, we leverage on the strength of the global infrastructure from our majority shareholder, Tata Communications and regional and local capabilities through our shareholders, Telecom Namibia and Nexus Connexion. That forte alone is unique to Neotel! Together with our partners, we are looking at ways that we can conduct meaningful business and expand our reach domestically and globally.
You have worked across the world’s fastest growing markets. What leaf, do you think, South Africa, the continent’s powerhouse, can take from these markets?
South Africa is very well positioned to learn how other geographies are leveraging growth opportunities locally and globally. South Africa is also well positioned to take advantage of its BRICS economic grouping status. This has the potential to provide an edge over other emerging economies. Businesses in South Africa have to get more efficient and focus on productivity to become more competitive in the global economic landscape. South Africa has a unique position in the continent – that of being the edge for many businesses to establish themselves and expand northwards. This country’s biggest strength is that it understands Africa. As service providers, we see ourselves playing the role of being an enabler for leveraging these growth opportunities. We are confident we can extend a helping hand to organisations that want to grow in South Africa and into the continent.
You have more than two decade’s international experience in the information technology and telecommunications space in various roles. What have been your key business lessons?
It may sound like a cliché, but the truth is that technology will continue to drive change. Change will be the only constant: organisations have to continuously adapt to the changing macro-and-micro economic environments. The key factor for any entity is to develop its human capital to be able to adapt to the changing environments. If you have the right people within the business, whom you develop and equip with the right skills, with the right market opportunity, the business will perform. Granted, you have to have a differentiator and in our case our fibre optic infrastructure and services thereof are our asset. But by far, our most vital and precious asset is our people - all 1 000 of them. Their hard work and dedication is the reason why we have achieved so much in so little time.
Any last words to share with the readers?
On behalf of Team Neotel, I would like to thank our customers for their unwavering support to Neotel and for being proponents of competition in the sector through their support to Neotel. Our journey so far has been exciting and rewarding and we expect Neotel to continue to make inroads into South Africa by helping our business customers in their growth. We will strive to help them to optimise their costs and above all, we will keep at raising the bar for ourselves. Mistakes may have been made during the course of our six years and we believe we have fixed most and will continue to improve where necessary, in future. We are confident of adding value to our customers by addressing key issues that every South African business faces: optimising the costs of their businesses and using new technologies to expand and maximise their productivity. We are simply delighted to have the opportunity to add value to our clients’ businesses and as their business grows, so does Neotel.