Competitive Strategies Case Study

South Africa’s Telecom Industry: Neotel’s Foray and the New Competitive Landscape

Abstract:
The South African telecom market had been the monopoly of the state controlled Telkom, which was the sole provider of fixed line telecommunication services. High tariff rates of Telkom hampered the nascent BPO industry, which the South African government was promoting to boost employment in the country. Under such circumstances, the telecom market in South Africa was deregulated and Neotel was launched in August 2006 as the Second National Operator (SNO), which is 51% owned by a consortium headed by India’s Tata group. It is believed that Neotel would give stiff competition to Telkom, whose monopoly was characterised by high tariffs and delayed services. As Neotel is the first company to be launched after the liberalisation and deregulation of the telecom industry in South Africa, other African nations would be monitoring its progress as a prelude to liberalising their own telecom markets.

Pedagogical Objectives:

• To understand the major forces shaping the telecommunication market in South Africa
• To analyse the impact of the launch of Neotel on the South African telecom industry
• To debate whether the advent of Neotel would bring true choice to South African telecom users who were dependant on a monopolistic service provider.

Keywords : Telecom industry in South Africa; Telkom; Telecom Tariffs in South Africa; Liberalisation of South African Telecom Industry; Industry Analysis Case Study; Fixed line telephony in South Africa; BPO Industry in South Africa; Second National Operator; Shareholding of Neotel; Telecom Tariffs and South African GDP Growth; Competitive Strategies of Neotel

Contents : 
The Competitive Landscape of South Africa’s Telecom Industry
Penetration of Telecom Services in South Africa
Number of Telecom Subscribers in South Africa
Neotel: The Entry and the Aftermath