Vox Orion, Vox Telecom’s largest subsidiary, is making good progress in switching its customers onto its own telecommunications network as wholesale call termination rates begin to bite.
MD Jacques du Toit says the company has already converted nearly half the minutes it sold through least-cost routing (LCR) products onto its own voice network.
Vox Orion is SA’s largest LCR player and is most vulnerable to the cuts in termination rates — the fees operators charge each other to carry calls between their networks. 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 call prices.
LCR companies like Vox Orion and its competitors — Huge Group, TeleMasters, Altech Autopage Cellular, 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 fall from 89c/minute in peak times now to 65c/minute on 1 March. The cuts late last year prompted Vox Telecom, which is listed on the JSE’s AltX, in large part to write down about R750m in goodwill and intangible assets.
Despite the write-down, it appears Vox Orion is making good progress in switching customers to Cristal Vox, Vox Telecom’s own Internet Protocol-based voice network.
Du Toit says lower termination rates have “expedited the change from Vox Orion being a voice terminating company only to a company that can provide the full range of telecoms products”.
The company is introducing new products on the Cristal platform. It recently launched a cloud-based PBX solution called Verto, taking aim at proprietary solutions from companies such as Cisco and Avaya. Verto offers PBX functionality over Telkom corporate data lines, allowing it to be managed centrally rather than at clients’ premises.
Du Toit says Vox Orion is already processing 37m minutes a month through Cristal Vox. “We’re nearly at the halfway mark in terms of conversions and margins are pretty much the same as they were with LCR,” he says. — Staff reporter, TechCentral