South Africa’s second fixed line telco Neotel has for the first time in seven years turned profitable before tax (PBT).

The telco announced a 21% increase in revenue compared to the same period last year, while earnings before interest, tax, depreciation and amortisation (ebitda) rose 105% year-on-year.

According to Neotel officials, the company's revenues grew across all its business units, including managed services, network services, NeoVoice and NeoInternet and NeoBroadband.

Meanwhile, customer service growth was at 27% in the small enterprise and retail segment and 24% in the business segment.

Neotel, which launched its LTE powered by NeoBroadband solution late in the second quarter, said it also seeing demand for data growth.

Neotel is South Africa’s main competitor to fixed line firm Telkom.

“We are proud of this performance and could only achieve these results with the support from our valued customers and our energised staff,” said Sunil Joshi, managing director and chief executive officer of Neotel.

"The plan was to turn EBITDA positive in FY12 – team Neotel did this. Then we set a target of being EBITDA positive in FY13 – Neotel did this too. Now we have achieved our target of being profitable before tax (PBT) positive ahead of plan,” he said.

Neotel's increase in earnings comes amid reports that South Africa's largest mobile operator Vodacom is planning to acquire 100% of Neotel shares.

Briefly commenting on the potential deal with Vodacom Joshi stated, “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.”