Auditors warn on Neotel's future after R1

Deloitte & Touche made the comments in Neotel's annual report, which Tata Communications - which owns 56% of the company - filed at the US Securities and Exchange Commission in November. Neotel, which has been fully operational for over three years, has been struggling to make headway in the competitive telecoms sector.

The annual report

According to the annual report, losses widened in the year to last March to R1,15bn from R739,5m a year before. According to the report, the board is "satisfied that the company has access to adequate resources" to stay in business "for the foreseeable future".

"The shareholders and lenders are discussing ways to meet the funding shortfall as envisaged in the revised business plan, and to remedy the September 2010 breach."

Kennedy Memani, chairman of Nexus Connexion, Neotel's black empowerment partner, said yesterday the company was "happy with Neotel's business performance".