South Africa ends phone monopoly

Telkom's mobile phone unit has boosted its profits.

South Africa's second fixed-line phone operator has launched - opening up its market and ending the monopoly of domestic firm Telkom.

Newcomer Neotel promises to "change the telecoms landscape", where consumer groups have complained that its call charges are too high.

It plans to invest 11 billion rand ($1.53bn; £802m) over the next decade.

It will begin operating for business clients in December, focusing initially on urban areas.

Johannesburg, Cape Town, Durban and Pretoria will be among the cities where it lays its first lines.

Cut costs

Telecoms regulator Icasa granted the licence to Neotel's parent firm SNO.

"We aim to reduce the cost of doing business in the country," Neotel managing director Ajay Pandey said.

Telkom was a government firm until 1991, then became a private company - the only one allowed to install fixed lines.

Analysts have warned that the changes to the market will hit Telkom's profit growth.

However, the firm has been readying itself preparing for the change by cutting its workforce and wage bill. It also has seen growth at mobile subsidiary Vodacom, which is co-owned by the UK phone company Vodafone.

Demand for phone services, especially mobile, are increasing in South Africa as the country's economic growth helps boost consumer spending power.