Newly appointed Cell C CEO Jorges Mendes has called on communications regulator Icasa to continue to skew wholesale call rates in the company’s favour to ensure it can compete effectively with bigger rivals Vodacom and MTN.

The mobile network operator, which no longer operates its own radio access network – the part of wireless telecommunications that connects subscribers to their nearest cellphone tower – needs “this asymmetry” in wholesale mobile call termination rates (MTRs) for at least the next five years.

Mendes said there is “no doubt” that Cell C has scored “some own goals” in the past. But the decision to hike call termination rates massively around the time of the company’s launch – to R1.25/minute – meant it struggled to get out of the starting gates.

“The MTR suddenly went to R1.25, from 20c, and that made it impossible to compete as the new entrant,” Mendes, who spent 28 years of his career at Vodacom, told journalists at his first media briefing as CEO of Cell C. “As the new entrant, you were on a hiding to nothing all day long.”

Asked whether high termination rates also helped Cell C in the early days – a claim that has been made by senior executives at Vodacom and MTN over the years – Mendes said: “That is emphatically not the case!”

He said that as a small and new entrant in the mobile market, Cell C was a net payer to its competitors, not a net receiver of MTR benefits.

Cell C asymmetry

A termination rate is the regulated fee telecoms operators charge one another to carry calls between their networks. Icasa has been driving the MTR down over the past decade, and has also given asymmetry benefits to smaller players. It’s that asymmetry Mendes said Cell C needs to continue. Icasa has said it wants to end the practice, expect for new licensees.

“The bigger the gap [in the MTR between the smaller players and the big operators] the better… We are still at a significant disadvantage in market share, customers, and so on,” Mendes said.