The share prices of MTN and Vodacom fell sharply on Monday, while Telkom climbed by nearly 5%, after telecommunications regulator Icasa publish draft regulations for inter-network call rates that strongly disfavour the two bigger operators.

At lunchtime, Vodacom was trading down by 5,8% at R116,72/share, while MTN, which is less reliant than its rival on the South African market in its revenue and profit mix, was off by 3,1%. Vodacom closed the session down by 6,3% while MTN ended the day off by 3,1%.

Investors poured into Telkom, meanwhile, sending the operator’s share price up by 4,7% shortly after 1pm on Monday. It touched a fresh 52-week high of R26,6o/share in afternoon trading, and ended the day up by 5%. The counter has more than doubled in the past six months on enthusiasm from investors that the company’s new management team, led by group CEO Sipho Maseko, will be able to turn around its fortunes.

Icasa on Friday published draft regulations in which it has proposed aggressive “asymmetry” in mobile call termination rates that will benefit operators with less than 20% market share for the next five years. That includes Cell C, with 17% market share, and Telkom Mobile, with between 1% and 2% of the market. The level of asymmetry will jump from 10% now to 95% on 1 March 2014, when the general rate for calls between networks falls from 40c/minute to 20c/minute.

Cell C and Telkom Mobile currently enjoy a 4c/minute advantage in that Vodacom and MTN pay them 44c/minute for call sent to the smaller operators while the rate is 40c/minute in the other direction. Next year, that price difference will rise from 4c/minute to 19c/minute, with the gap narrowing over the following four years.

Icasa has proposed that in 2015, the general mobile termination rate fall to 15c/minute and then to 10c/minute in 2016. Asymmetry for operators with between 10% and 20% of the market will fall away in 2019, but those with less than 10% will continue to enjoy a 40% advantage until they meet the 10% threshold (or until Icasa changes the regulations).