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Neotel turns a profit (before tax)



Neotel has announced that the business grew 21% year-on-year and turned PBT (profitable before tax) positive for the first time since its inception seven years ago.

The company also announced a 21% increase in revenue compared to the same period last year, while EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) rose 105% year-on-year.

‚”We are proud of this performance and could only achieve these results with the support from our valued customers and our energised staff,‚” says Sunil Joshi, MD & CEO of Neotel. ‚”The plan was to turn EBITDA positive in FY12 Team Neotel did this. Then we set a target of being EBIT positive in FY13 Neotel did this too. Now we have achieved our target of being PBT positive – ahead of plan.‚”

Joshi says that in the current market, which is impacted by low levels of growth (1.4% for fixed line) and price erosion, the Neotel sales growth is 12-15 times the industry growth rate. ‚”The sales growth has been possible with the support from our customers, the launch of new and innovative solutions, a real focus on improving customer experience, cost control and by growing our people. Our customer numbers have increased. New and existing customers are buying more from us because they see value from our service and they reduce their costs. The combination of these key focus areas has delivered these results for the company.‚”

Neotel grew revenue across all its business units, including Managed Services (125%), Network Services (10%), NeoVoice (24%) and NeoInternet and NeoBroadband (20%). This has resulted in sustained customer services growth of 27% in the Small Enterprise/Retail segment and 24% in the Business segment.

Neotel did not comment on the exclusive discussions with Vodacom regarding a potential acquisition of the company, apart from reiterating that the finalisation of the transaction is subject to the successful conclusion of commercial negotiations and receiving the requisite approvals. Joshi did note that, ‚”a combined entity would be better placed to offer an expanded product range and level of increased funding and as a consequence, enhanced customer choice as well, while enabling Neotel to extend its footprint in South Africa.‚”

Neotel launched its LTE powered by NeoBroadband solution in late Q2 and is also seeing demand for data growth.

Joshi says.‚” With the launch of the LTE service, Neotel has a full suite of Internet and Broadband products for their enterprise and SMB customers with the best performance of Internet, as per the June 2013 MyBroadband survey. Complementing its world-class tele-presence service, Neotel also launched its innovative NeoConference solution (Videoconferencing as a Service), combining different platforms in one ubiquitous video experience.‚”