Neotel

Neotel was a South African telecommunications company created to introduce competition into a fixed-line market historically dominated by Telkom. The business originated in the policy and regulatory reforms that followed a 2001 amendment to South Africa's Telecommunications Act, which permitted the establishment of a Second National Operator, commonly referred to as the SNO. Eskom and Transnet were initially identified as infrastructure-related shareholders, with Transnet participating through its telecommunications division, Transtel. After a bidding process for additional ownership, the SNO shareholder agreement was signed on 15 August 2005. Licensing arrangements were finalized in March 2006, and the company was formally unveiled as Neotel on 31 August 2006 in Kyalami, Midrand. Neotel was positioned as a challenger to Telkom rather than simply as another mobile operator. Its network strategy emphasized convergence between voice, data, Internet access and wireless technologies. The company offered international transit to wholesale customers from September 2006, and later developed business connectivity products including local and international leased lines, virtual private network services, voice services and Internet access. Its next-generation network was intended to support both traditional telecommunications and Internet Protocol-based services, including voice over IP. The company also sought to use wireless broadband technologies to reach customers beyond the practical limits of conventional fixed-line infrastructure. Neotel announced its business services in November 2007 and introduced consumer services in May 2008. Its consumer portfolio included NeoConnect, an EV-DO-based wireless access service supplied with a handset supporting voice calls and SMS. NeoConnect Lite targeted lower-speed Internet access, while NeoConnect Prime offered higher speeds and larger or uncapped data options. Availability was initially limited to selected metropolitan areas, including Johannesburg, Durban, Cape Town, Port Elizabeth and Pretoria. The arrival of Neotel was associated with expectations of more competitive pricing and improved access to higher-speed Internet services, including CDMA2000, WiMAX and, later, xDSL and fibre-based connectivity. International connectivity was another part of Neotel's business. The company used and participated in submarine cable systems serving South Africa, including SAT-3, SAFE, SEACOM, EASSy and WACS. It managed the South African landing station for SEACOM after that system entered service in July 2009, strengthening its role as both a retail and wholesale connectivity provider. Ownership changed substantially during the company's life. Tata Communications acquired interests previously held by Eskom, Transtel and the Two Consortium in transactions completed in 2009 and 2011, increasing its stake to a majority position. In 2014, Neotel shareholders accepted a proposed ZAR 7 billion acquisition by Vodacom. Although the transaction received approval from the Independent Communications Authority of South Africa in 2015, legal challenges concerning the transfer of Neotel's licences and spectrum prevented completion, and the deal collapsed in March 2016. In June 2016, Tata Communications announced the sale of its stake to Liquid Telecom, which was majority owned by Econet Wireless Global. Liquid subsequently acquired Neotel in 2017, with the resulting business associated with Liquid Intelligent Technologies. Neotel is therefore best understood as a historical South African operator whose assets, licences and operations were absorbed into the Liquid group rather than as an independently operating contemporary brand.

Neotel emerged from South Africa's effort to liberalize a telecommunications sector dominated by Telkom. A 2001 amendment to the Telecommunications Act enabled the creation of a Second National Operator, intended to provide a direct competitor to the incumbent fixed-line provider. Eskom and Transnet were initially identified as shareholders, with Transnet represented by Transtel. A process to select additional investors began in early 2002, and the SNO shareholder agreement was signed on 15 August 2005. Licence terms were finalized in March 2006, after which the operator was launched as Neotel on 31 August 2006. The company began with a wholesale and enterprise orientation. International transit services became available in September 2006, while the business-services portfolio announced in November 2007 included local and international leased lines, voice, data, VPN and Internet services. Neotel promoted a converged, next-generation network capable of supporting both data and voice, including voice over IP. Wireless technologies were important to its rollout strategy because they could extend broadband and telephony without relying solely on traditional copper access networks. Consumer services were introduced in May 2008. The best-known consumer product was NeoConnect, an EV-DO wireless service that combined Internet access with a handset supporting SMS and voice. NeoConnect Lite offered speeds of up to 156 kbit/s, while NeoConnect Prime was described as supporting speeds of up to 2.4 Mbit/s. Plans included different data allowances, including uncapped options. The service was initially restricted to selected urban areas and had technical limitations, including variable latency and a USB-only connection that was not suitable for every type of telephone-line peripheral. Neotel also planned or used WiMAX, xDSL and fibre technologies as the market evolved. Neotel developed a significant international-connectivity role. It used SAT-3 and SAFE capacity, managed the South African landing station for SEACOM when that cable entered service on 23 July 2009, and participated in EASSy and WACS. These activities complemented its national enterprise and consumer offerings and made the company relevant to wholesale carriers as well as end users. The company's ownership changed during the 2000s and 2010s. Tata Communications acquired stakes originally associated with Eskom, Transtel and the Two Consortium in transactions during 2009 and 2011. Its ownership rose from an earlier minority position to approximately 68.5 percent, making it the majority shareholder. In May 2014, shareholders accepted a ZAR 7 billion offer from Vodacom. The Independent Communications Authority of South Africa approved the transaction in 2015, but challenges in court concerning the transfer of Neotel's licences and spectrum prevented the deal from closing. The proposed acquisition collapsed in March 2016. In June 2016, Tata Communications announced that it had agreed to sell its Neotel stake to Liquid Telecom for US$428 million. Liquid later acquired Neotel in 2017. The ownership structure associated with the acquisition included Liquid Telecom and Royal Bafokeng Holdings, with the latter identified as a black economic empowerment partner. After the acquisition, Neotel ceased to function as a clearly independent national brand and became part of Liquid's broader African telecommunications infrastructure and connectivity business.

• 2017

  Liquid acquires Neotel

  [1]Neotelen.wikipedia.org

  Neotel was acquired by Liquid, ending its independent corporate trajectory.

• 2016

  Vodacom transaction collapses

  [1]Neotelen.wikipedia.org

  Legal challenges over licence and spectrum transfers prevented the proposed acquisition from being completed.

• 2014

  Vodacom acquisition offer accepted

  [1]Neotelen.wikipedia.org

  Shareholders accepted Vodacom's proposed ZAR 7 billion purchase of Neotel.

• 2009

  SEACOM enters service

  [1]Neotelen.wikipedia.org

  Neotel managed the South African SEACOM landing station after the cable system was commissioned.

• 2008

  Consumer services launch

  [1]Neotelen.wikipedia.org

  Neotel entered the consumer market with products based on wireless broadband and converged voice and data access.

• 2007

  Business services are announced

  [1]Neotelen.wikipedia.org

  Neotel announced its enterprise telecommunications portfolio, including leased lines, voice, data, VPN and Internet services.

• 2006

  Neotel launches

  [1]Neotelen.wikipedia.org

  The company was unveiled on 31 August in Kyalami, Midrand, as South Africa's second national fixed-line operator.

• 2005

  SNO shareholder agreement is signed

  [1]Neotelen.wikipedia.org

  The shareholder agreement for the Second National Operator was signed on 15 August.

• 2002

  Bidding begins for additional SNO shareholders

  [1]Neotelen.wikipedia.org

  A process began to identify investors for the remaining interests in the planned Second National Operator.

• 2001

  Telecommunications Act amendment enables a Second National Operator

  [1]Neotelen.wikipedia.org

  South African legislative reform created the basis for licensing a competitor to Telkom's fixed-line monopoly.

A challenger telecommunications operator focused on introducing competition to South Africa's fixed-line market through converged voice and data networks, wireless broadband, enterprise connectivity and wholesale international capacity.

• Wireless broadband · 2008

  NeoConnect Lite

  NeoConnect Lite was an EV-DO-based consumer connectivity product designed for lower-speed wireless Internet access. The service was supplied with a telephone handset supporting voice calls and SMS and was offered with data allowances ranging from limited packages to unlimited options. Its advertised maximum speed was up to 156 kbit/s. Coverage was initially concentrated in selected South African metropolitan areas, and the service used a USB connection rather than a conventional telephone-line interface.

• Wireless broadband · 2008

  NeoConnect Prime

  NeoConnect Prime was the higher-speed member of Neotel's consumer EV-DO wireless access range. It provided Internet connectivity alongside a handset capable of voice and SMS and offered data-cap choices from several gigabytes to unlimited usage. The advertised maximum speed was up to 2.4 Mbit/s. As with other early Neotel wireless products, availability was geographically limited and variable latency could affect applications sensitive to delay or jitter.

• Enterprise connectivity · 2007

  Business leased lines

  Neotel's business portfolio included local and international leased-line services for enterprise and wholesale customers. These offerings formed part of the company's strategy to compete with Telkom in fixed connectivity and to provide organizations with dedicated links for voice, data and Internet traffic.

• Enterprise telecommunications · 2007

  Voice, data and VPN services

  Neotel offered enterprise voice and data services, including virtual private networking and Internet access, over a converged next-generation network. The portfolio was aimed at business customers requiring integrated communications rather than separate legacy voice and data products, and was compatible with the company's broader interest in IP-based communications.

• Wholesale telecommunications · 2006

  International transit

  International transit was a wholesale service that used Neotel's international connectivity resources to carry traffic for other telecommunications customers. It was available from September 2006 and complemented the company's participation in submarine cable systems and its role in South African international connectivity infrastructure.

• 2016

  Sell Tata Communications' stake to Liquid TelecomM&A

  Background

  Following the failed Vodacom transaction, Tata Communications sought to exit its investment in Neotel.

  Action taken

  Tata Communications announced an agreement to sell its Neotel stake to Liquid Telecom for US$428 million.

  Aftermath

  Liquid acquired Neotel in 2017, after which Neotel's independent brand and corporate identity were absorbed into the Liquid group.

  Stake sale value. US$428 million (Announced June 2016)

  Source

• 2014

  Accept Vodacom's acquisition offerM&A

  Background

  Vodacom sought to acquire Neotel and its telecommunications assets for ZAR 7 billion.

  Action taken

  Neotel shareholders accepted the offer, which remained subject to regulatory and legal conditions.

  Aftermath

  Although regulatory approval was obtained in 2015, court challenges relating to licences and spectrum prevented completion, and the transaction collapsed in March 2016.

  Proposed acquisition value. ZAR 7 billion offer (2014)

  Source

• 2008

  Enter the consumer broadband market with NeoConnectProduct launch

  Background

  After beginning with business and wholesale services, Neotel sought to broaden its customer base through wireless access products.

  Action taken

  Neotel launched NeoConnect Lite and NeoConnect Prime, EV-DO-based services combining Internet access with voice and SMS functionality.

  Aftermath

  The products extended Neotel's challenger proposition to consumers, although coverage remained limited and the technology had performance and hardware constraints.

  Source

• 2006

  Launch a converged challenger networkStrategy

  Background

  Neotel was established to compete directly with Telkom and to combine fixed-line, wireless, voice, data and Internet capabilities.

  Action taken

  The company launched as the Second National Operator, offered wholesale international transit and built a next-generation network intended to support multiple communications services.

  Aftermath

  Neotel became the principal fixed-line challenger brand in South Africa and later expanded into enterprise, consumer and international-connectivity markets.

  Source

1. 1Neotelen.wikipedia.org