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Cape Town - Mobile operators have reacted with caution following the announcement of mobile termination rates by the regulator.
Icasa or the Independent Communications Authority of South Africa on Monday announced new MTRs. This is the rate that operators pay each other for calls that terminate on rival networks.
Icasa reduced the rates asymmetrically in an effort to foster greater competition in South African mobile industry. Rates for junior operators Telkom Mobile and Cell C are significantly lower than those of MTN and Vodacom.
In the previous round of regulation, MTN sued the regulator, sending the process back to the drawing board.
"This process has been constructive and is a good example of how the industry can work with the regulator to get to a scientifically based result. We appreciate Icasa's willingness to consult with industry players," Vodacom spokesperson Richard Boorman told Fin24.
Competition
The new rates apply from 2014 to 2017 and Icasa said that termination rates were 20c for 1 October 2014 to 30 September 2015, 16c for the following year and 13c for the final year.
Smaller operators, such as Cell C and Telkom Mobile, could charge asymmetrical rates of 31c for 1 October 2014 to 28 February 2015, 24c for the following year and 19c for the final year ending 28 February 2017.
"MTN will only comment after we have reviewed the regulation. MTN will continue to co-operate and engage constructively with the Authority in all matters that affect the industry," said Ahmad Farroukh, MTN SA CEO.
The principle behind the rate reduction is to facilitate greater competition between operators that is expected to make mobile rates more affordable for South Africans.
But it may not be that easy given that serious challenges loom in the industry.
As demand for data services grows, mobile operators face a spectrum crunch because of the failure of the regulator to assign spectrum in the critical 800MHz frequency band.
Vodacom has completed the refitting of around 10 000 base stations and MTN is engaged in a similar process. The process should enable operators to "switch on" high speed data services when the spectrum is eventually assigned.
Revenue
The 800MHz band is currently occupied by analogue broadcasters like the SABC which has consistently failed to demonstrate a willingness to move toward digital terrestrial television.
The new MTRs could potentially reduce earnings for MTN and Vodacom and both companies are keen to examine the policy and its impact on operations.
MTN reported a 24.9% decline in revenue at the end of 2013 which it attributed to an MTR cut.
"We have some concerns about the asymmetry granted to certain companies and the potential impact that this could have on our business," said Boorman.
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