“Blind support” of one operator will not lower SA call costs – MTN

“Blind support” of one operator will not lower SA call costs – MTN

Lowering the cost of mobile communications in South Africa will not be achieved by “blind support” for a single operator by the Independent Communications Authority of South Africa (ICASA), according to Zunaid Bulbulia, chief executive officer (CEO) of MTN South Africa.

In an interview with HumanIPO, Bulbulia said MTN supports the end goal of lowering overall prices of mobile communications in the country, but said the mobile termination rate (MTR) regulations published in January see ICASA support one operator at the cost of the industry at large.

HumanIPO reported in January ICASA published regulations providing for 50 per cent cuts to MTRs, as well as asymmetric charging to the detriment of dominant operators and the benefit of smaller ones such as Cell C, prompting a legal challenge to the regulations by MTN, and later Vodacom.

“MTN shares the regulator’s vision of lowering the cost of telecommunications, but we believe that this not be motivated by blind support of narrow sectional interests of one player at the expense of the growth and the development of the entire industry,” Bulbulia told HumanIPO.

“According to the proposed MTR cuts by ICASA, it is going to cost MTN subscribers twice to terminate costs to the smaller operators, and we believe that this is not only unsustainable, but grossly unfair.

“Moreover, the substantial investment that MTN has made over the years in capital expenditure with regards to infrastructure roll-out will be negatively affected.”

Bulbulia said any cut to MTRs must be based on a fair evaluation of the interests of all players in the market, while the results of previous price cuts should also be examined before ordering further extensive interconnect rate drops.

“MTN believes that the decline in MTRs must be driven by a fair process and appropriate costing study ensuring MTRs are reflective of the costs incurred by all players in the market, including smaller players,” Bulbulia said.

“MTN favours an approach that follows global practise and that strikes a balance between the cost of regulation versus impact.

“The current draft regulations follow barely a year after the implementation of the last phase of the glide path, without first evaluating whether the last phase did yield expected results on retail prices.”

The CEO said all companies have the right to ask for legal examination of the actions of the regulator, and MTN specifically wants the court to set aside the parts of the new regulations which it agrees are “irregular”.

“MTN is of the view that the regulations do not meet these requirements and it has instituted legal proceedings against ICASA,” Bulbulia said.

“MTN has asked the court to review what has happened and to set aside those parts of the regulations which it finds are irregular. This is a right which is afforded to all companies which are affected by the actions of administrators.”

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