Cuts in wholesale mobile call termination rates, the fees operators charge each other to carry calls between their networks, knocked R1,5bn off Vodacom’s top line in the 12 months to 31 March 2011.
In the same period, earnings before interest, tax, depreciation and amortisation were R500m lower as a direct result of the cuts, says chief financial office Rob Shuter.
Mobile operators agreed to cut the rates voluntarily last March. Telecommunications regulator, the Independent Communications Authority of SA, is forcing them down further over a glide path period to 2013 in the hope that the cuts will translate into lower retail rates.
Shuter says revenue accrued from Telkom has also fallen due to continuing fixed-to-mobile substitution as consumers turn to cellphones and away from fixed lines.
Despite the knock from lower termination rates, Vodacom turned in a solid performance in the 2011 financial year, with core headline earnings rising by about 15%. The group declared a cumulative 2011 dividend of R6,8bn, up 61% on 2010. — Staff reporter, TechCentral
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