Icasa to review rate cuts for cellphones

THE communications regulator will review a January order to cut the fees cellular operators collect from rivals to access their networks following complaints from Vodacom and MTN.

In a March 12 response to objections by the country’s two largest carriers, the Independent Communications Authority of SAsaid that it had decided to engage in a “reconsideration” of the termination rates applicable for the years beginning April 1 2015 and April 1 2016.

The review would take six months, the authority said.

The regulator ordered cellphone termination rates be cut 50% to 20c a minute from April 1, with further cuts to 15c starting April 2015 and 10c a year later.

The reductions are intended to help smaller carriers including closely held Cell C and Telkom, the fixed-line phone company that is 38% controlled by government.

In an e-mailed statement, the regulator confirmed the affidavit and its content, adding that the review was being done with the help of an external economist.

“The matter is going to court next week and all clarification will be made then,” it said.

Lower revenue from cellphone termination would mean MTN and Vodacom receiving less from smaller competitors, putting pressure on the companies to cut costs.

Vodacom’s cellphone interconnection revenue decreased 24% to R1.9billion in the six months to endSeptember, while MTN’s fell 25% in South Africa.

Vodacom, a unit of Vodafone, joined MTN, Africa’s largest wireless operator, in taking legal action against the regulator over how it put together the plans to reduce termination rates.

The two Johannesburg-based cellular operators control about 80% of the South African market, according to BPI Capital Africa analyst Kate TurnerSmith.

A Vodacom official declined to comment on the legal process.

An MTN representative was not immediately available for comment. — Bloomberg