Vodacom CEO Pieter Uys said the cellular group was “not opposed” to lower interconnection rates provided they were set based on the demonstrable cost of carrying another operator’s call, plus a fair profit.

“The only issue is how this should be done,” Uys said in a statement.

“In the first place, mobile interconnection rates cannot unilaterally be reduced by Vodacom since we would irreparably damage our business were other operators not to follow with a similar reduction,” he said. There had been market talk that Vodacom would reduce its rates as a pre-emptive move to appease government and the industry regulator, the Independent Communications Authority of SA (Icasa).

“The reduction of mobile terminating rates must be orchestrated by Icasa.”

Uys said the COA/CAM, the set of accounts which sets the company’s costs, have been submitted to Icasa. This in order for them to ascertain Vodacom’s cost structure, including interconnection costs, he said. “Should Icasa require any further information, we will, as always, be glad to assist. There is no point in speculating what the mobile terminating rate should be; the application of the cost plus fair profit principle by Icasa will provide the answer.”

Uys also said Icasa would have to apply its mind in such a manner that it did not “financially damage any operator”, since this would simply “reduce the extent of competition in the industry and discourage investment in telecommunications infrastructure, which, in the context of SA, generally benefits the poor and marginalised as borne out by the 110% mobile telephony penetration level achieved since the advent of mobile 15 years ago”.

“International best practice has been to reduce mobile interconnection rates over a period of time to avoid business model shocks and prevent the scramble by operators for lucrative customers at the expense of the poor and marginalised communities,” Uys said. — Staff reporter, TechCentral