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    TechCentralTechCentral
    Home»News»Interconnect knocks Vox

    Interconnect knocks Vox

    News By Editor20 April 2011
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    AltX-listed Vox Telecom has been dealt knock to earnings by lower interconnection rates. The company has released its interim results for the six months ended 28 February, showing headline earnings down 7% to 2,14c/share and profit down 6% to R24m.

    Vox has attributed the downturn to the changes it needs to make, particularly in its Vox Orion subsidiary, to lower interconnection rates — the rates that telecommunications providers charge each other to carry calls onto their networks.

    Vox Orion is SA’s largest provider of least-cost routing (LCR) solutions and is regarded as one of the companies most vulnerable to the cuts in termination rates.

    The Independent Communications Authority of SA is forcing down these rates on a glide path over three years, hoping the cuts will flow through to reductions in retail mobile call prices.

    LCR companies like Vox Orion and its competitors — Huge Group, TeleMasters, Altech Autopage Cellular and Nashua Mobile — have taken advantage of arbitrage opportunities from high mobile call termination rates. However, those opportunities are diminishing as the rates come down.

    Mobile termination rates will fell from R1,25c/minute to 89c/minute during peak times in March last year and again this march to 65c/minute. The cuts late last year prompted Vox Telecom, in large part to write down about R750m in goodwill and intangible assets at its last financial results set in October last year.

    Vox Orion has been migrating its LCR customers to its own Internet Protocol-based network and by January had made steady progress.

    Vox Telecom continues to trade under cautionary, believed to be related to a shareholder restructuring and planned delisting.  — Staff reporter, TechCentral

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