Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      MultiChoice is working on a wholesale overhaul of DStv

      10 July 2025

      Spam call epidemic: operators say their hands are tied

      10 July 2025

      Britehouse unit breaks free from NTT Data

      10 July 2025

      Samsung’s bet on folding phones faces major test

      10 July 2025

      OpenAI to launch web browser in direct challenge to Google Chrome

      10 July 2025
    • World

      Grok 4 arrives with bold claims and fresh controversy

      10 July 2025

      Bitcoin pushes higher into record territory

      10 July 2025

      Cupertino vs Brussels: Apple challenges Big Tech crackdown

      7 July 2025

      Grammarly acquires e-mail start-up Superhuman

      1 July 2025

      Apple considers ditching its own AI in Siri overhaul

      1 July 2025
    • In-depth

      Siemens is battling Big Tech for AI supremacy in factories

      24 June 2025

      The algorithm will sing now: why musicians should be worried about AI

      20 June 2025

      Meta bets $72-billion on AI – and investors love it

      17 June 2025

      MultiChoice may unbundle SuperSport from DStv

      12 June 2025

      Grok promised bias-free chat. Then came the edits

      2 June 2025
    • TCS

      TCS | Connecting Saffas – Renier Lombard on The Lekker Network

      7 July 2025

      TechCentral Nexus S0E4: Takealot’s big Post Office jobs plan

      4 July 2025

      TCS | Tech, townships and tenacity: Spar’s plan to win with Spar2U

      3 July 2025

      TCS+ | First Distribution on the latest and greatest cloud technologies

      27 June 2025

      TCS+ | First Distribution on data governance in hybrid cloud environments

      27 June 2025
    • Opinion

      In defence of equity alternatives for BEE

      30 June 2025

      E-commerce in ICT distribution: enabler or disruptor?

      30 June 2025

      South Africa pioneered drone laws a decade ago – now it must catch up

      17 June 2025

      AI and the future of ICT distribution

      16 June 2025

      Singapore soared – why can’t we? Lessons South Africa refuses to learn

      13 June 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CambriLearn
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » News » Wide fallout expected in rates battle

    Wide fallout expected in rates battle

    By Chantelle Benjamin28 February 2014
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp

    user-640

    MTN contesting communications regulator Icasa’s new reduced interconnect call rates is a high-stakes game that is going to leave no one in the cellphone sector untouched, experts have warned.

    “This is the first time that MTN and Vodacom have been staring down the barrel of a gun,” said analyst Nadim Mohamed. “Icasa is obviously serious about these changes and, as far as I can remember, this is the first time a case this big against a regulator has made it to court in South Africa. Normally it’s resolved internally within Icasa.”

    Steven Ambrose, head of consultancy Strategy Worx, agreed, saying it marks a new chapter in the relationship between the networks and the regulator, and indirectly with the government, where previously issues were resolved through consultation.

    The bonus is that the consumer is likely to benefit from a decreasing interconnect rate — the rate one network pays another to connect a call — with one analyst saying it will probably result in a “price war”.

    “There have already been new deals offered by cellphone companies, with Vodacom in particular targeting new deals to try to get ahead of the curve,” said the analyst.

    Ambrose said the cheaper prices will take a while to filter through to the consumer, however.

    A point was made that less profit for the players may result in a deterioration in service and signal if infrastructure cannot be maintained.

    MTN has said in court papers that it expects to lose R1bn/year in revenue, excluding the money it would receive from the other three operators. Vodacom has also objected to the decision.

    Icasa agreed to postpone the implementation of the new termination rate to May, after MTN, in the high court in Johannesburg, challenged the new regulations that would see MTN and Vodacom paying 20c/minute to connect calls, with smaller players Cell C and Telkom charged 44c/minute.

    The case is now said to be scheduled for the end of March, but this could not be confirmed at the time of publication. Thirty other respondents, which have been linked to the case merely as interested parties, including Vodacom, have been asked to submit affidavits.

    The irony is that before 1998 the call rate was about 20c/minute. Soon after Jay Naidoo, then communications minister, announced that new player Cell C would be entering the market, the interconnect rate moved to R1,23/minute between 1998 and 2001, making South Africa’s rate the most expensive in Africa.

    Cell C’s recent advertisement challenging MTN clients to move to a company that was not fighting to keep its clients paying higher connection rates is more than likely a strategic move by Cell C acting CEO Jose Dos Santos.

    Ambrose said: “MTN have been the worst affected recently by the migration of customers [as prepaid figures show], and have lost customers to Cell C. The flip side is that they [MTN] will have to sharpen their pencils and offer real value to customers going forward.”

    MTN has accused Icasa of not following proper procedure and warned that the consequences will be “disastrous” for the company.

    A successful application by MTN to halt the implementation of the new rates could have repercussions for Cell C. A senior staff member said it could mean the loss of some investors that may not want to wait a year or two while the case goes to court.

    The investors of MTN and Vodacom might have to pay smaller dividends and make some cuts, but are unlikely to be seriously affected.

    Mohamed said: “Our research shows that the top two companies tend to hold their position and are not seriously affected. I think their future is going to be in data.” He said people tend to hold on to the shares of companies that in this case still bring in 90% of the sector’s revenue.

    Of course, taking on Icasa before being allocated increased spectrum for its long-term evolution network, or 4G wireless broadband technology, may not have been a strategically sound decision for MTN, one analyst said.  — (c) 2014 Mail & Guardian

    • Visit the Mail & Guardian Online, the smart news source


    Icasa MTN Nadim Mohamed Steven Ambrose Vodacom
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleCarrim lauded over SABC action
    Next Article OpenView HD gets in on Pistorius action

    Related Posts

    Spam call epidemic: operators say their hands are tied

    10 July 2025

    Vodacom, Maziv deal now looks likely after CompCom U-turn

    8 July 2025

    Icasa publishes new draft regulations for digital TV

    8 July 2025
    Company News

    AI in project management: a new era of efficiency and transformation

    10 July 2025

    Samsung unfolds the future with thinnest, lightest Galaxy Z Fold yet

    9 July 2025

    Huawei supercharges South African SMEs with over 20 new eKit products

    9 July 2025
    Opinion

    In defence of equity alternatives for BEE

    30 June 2025

    E-commerce in ICT distribution: enabler or disruptor?

    30 June 2025

    South Africa pioneered drone laws a decade ago – now it must catch up

    17 June 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.