MTR cut too steep – Vodacom

MTR cut too steep – Vodacom

The planned cuts in South African mobile termination rates are too steep and may have negative impacts on the telecommunications industry, according to Vodacom, the country’s biggest mobile operator.

HumanIPO reported last week the Independent Communications Authority of South Africa (ICASA) had announced draft termination rates, with a mobile call termination rate of ZAR0.20 (US$0.02) set to apply from March next year.

Cell C chief executive officer (CEO) Alan Knott-Craig Sr said yesterday ICASA had got its reduction of MTR “spot on”.

Vodacom, on the other hand, said today it would be responding to the draft regulations to argue for a more gentle glide path for reductions, though it insisted that it nonetheless supports the overall goal of significant MTR reductions.

“We support ICASA’s goal of reducing mobile termination rates, provided that such a reduction is cost-based,” said Shameel Joosub, CEO of Vodacom.

“Cuts in mobile termination rates can have a profound impact on both our business and those of our suppliers, franchisees and other stakeholders. We therefore support a managed ‘glide path’ of reductions over several years.”

Vodacom also raised concerns about the proposed increas in asymmetry, which the company says effectively puts Vodacom and its customers in the position of subsidising other operators.

“The proposed changes take the current rate of asymmetry from a 10 per cent differential to rates ranging between 95 per cent and 160 per cent over three years,” Joosub said.

“The accepted practice worldwide is declining asymmetry for a limited period for new entrants at a fraction of the levels proposed. We intend to engage with ICASA on this point to motivate for a more reasonable outcome.”

Image courtesy of Shutterstock.

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