Telkom: time to stop subsidising Vodacom, MTN

 ·22 Sep 2013
Telkom fixed line

Telkom CEO Sipho Maseko says Vodacom and MTN have “unfairly benefited” from Telkom-subsidised termination rates, and the time has come to end it, reports the Sunday Times.

For calls to terminate on another network, it costs operators a maximum of 40c. However, for calls to terminate on Telkom’s network, operators need only pay 12c.

According to Maseko, this means Telkom has piad around R60 billion over seven years to terminate calls on cellular networks – while receiving “a pittance” in return, the Sunday Times said.

“It’s been through Telkom subsidies that companies like Vodacom and MTN have been able to grow internationally,” Maseko said.

According to the report, Maseko said the mobile operators had unfairly benefited – and the “unjust” relationship needed to change.

Maseko appealed to Icasa to enable Telkom to charge more and compel cellular companies to charge less.

Telkom’s mobile arm, Telkom Mobile is the only unprofitable division of the company, according to Maseko, and squandering the company’s capital.

However, according to the report, Maseko said there were plans afoot to “de-risk” it and make it less capital intensive – plans which would be unveiled at Telkom’s results in November.

He was adamant it wouldn’t be sold or shut down, the Sunday Times reported, but it was going to have “a different model”.

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