Vodacom bemoans asymmetry plans
Vodacom Group CEO, Shameel Joosub says that Icasa’s proposed asymmetry in mobile termination rates between large and small cellular operators would mean that it would effectively subsidize its competitors.
The Independent Communications Authority of South Africa (Icasa) announced on Friday, 4 October 2013, that it wants to cut the costs of terminating a call on a mobile network to R0.10 over the next 3 years.
Under the proposed regulations, smaller operators such as Cell C and Telkom Mobile will be afforded preferential termination rates for 6 years, after which their rates will also be R0.10.
Shares in Vodacom tanked on the JSE on Monday (7 October), sliding 6.26% or R7.74, to R116 at close.
In a written statement, Shameel Joosub, Vodacom Group CEO said that the initial drop in termination rates from 40c/minute to 20c/minute was to steep, and could have a profound impact on the operator’s business.
“We support Icasa’s goal of reducing mobile termination rates, provided that such a reduction is cost-based. Cuts in mobile termination rates can have a profound impact on both our business and those of our suppliers, franchisees and other stakeholders. We therefore support a managed ‘glide path’ of reductions over several years.”
“We will be responding to Icasa to make the case that the proposed reduction and glide path, which has an initial drop of 50% in March 2014, are too steep and could have serious negative impacts.”
Asymmetry
The second part of the proposed changes involves an increase in asymmetry. This change, Vodacom said, would mean it pays more to connect a voice call to someone on Cell C or Telkom Mobile than these networks pay to connect to someone using Vodacom.
“The proposed changes take the current rate of asymmetry from a 10% differential to rates ranging between 95% and 160% over three years. The accepted practice worldwide is declining asymmetry for a limited period for new entrants at a fraction of the levels proposed.
“We intend to engage with Icasa on this point to motivate for a more reasonable outcome. We see this proposed asymmetry as placing Vodacom (and by extension, our customers) in the position of effectively subsidising our competitors,” Joosub said.
More on Icasa and MTRs
Operators mull action on termination rate cuts
MTN, Vodacom freefall on MTR cuts
Icasa announces new draft call regulations
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