Vodacom will lose R1bn in the 2015 financial year if the Independent Communications Authority of South Africa’s (Icasa’s) final termination rates are not challenged and overturned.
That claim was made by the operator’s group CEO, Shameel Joosub, on a call to analysts on Wednesday to discuss its third financial quarter results for the period ended 31 December 2013, according to a report by wires agency Reuters.
Termination rates are the fees operators are allowed to charge each other to carry calls between their networks. Icasa will cut the rates to 20c/minute on 1 March from 40c/minute now, and will lower the rates still further by 2016 to 10c/minute.
It will also introduce an aggressive regime of “asymmetry” that favours smaller operators, including Cell C and Telkom Mobile. In term of the asymmetry, Vodacom and MTN, which together hold about 90% of the revenue share of the market, will pay more to carry calls onto their smaller rivals’ networks than the other way around.
Both MTN and Vodacom are unhappy with Icasa’s regulations and have hinted at legal action. Icasa is hoping the cuts and the asymmetry will lead to greater competition and lower retail rates for consumers.
In notes accompanying its third quarter results, Vodacom said it supports a “glide path” for termination rates provided that the fees are set in accordance with procedures set out in the Electronic Communications Act, which requires, it said, that the rates be cost based.
“Cost-based rates are important to sustain our ongoing investment strategy. We have concerns about the process used to determine these published rates. We intend to challenge the legal validity of the process,” Vodacom said. — (c) 2014 NewsCentral Media