“We will crack you,” Cell C CEO Alan Knott-Craig said to Vodacom CEO Shameel Joosub at the 2013 MyBroadband conference on Wednesday, 9 October 2013.
Knott-Craig told attendees that they had built such strong telecommunications companies that smaller players such as Cell C couldn’t “crack” them.
A year ago, however, they started cracking the big players, such as Vodacom and MTN.
Knott-Craig disputed Joosub’s statements from earlier in the day that people should look at the effective rates when benchmarking mobile prices against other markets.
“The barometer of price in a country is the price you lodge with [the regulator,] Icasa,” Knott-Craig said.
“Nothing is going to happen to [these high prices] if there is not a competitive market,” Knott-Craig said.
Using the metaphor of a play, Knott-Craig said “scene 1 of 7” for boosting competition in South Africa’s telecommunications sector is to reduce termination rates and give greater asymmetry to smaller operators.
“You can’t have a 99c price if your MTR is R1.95,” Knott-Craig said, adding that the cost to terminate a call is the biggest input to the price.
He went on to explain that when Icasa reduced the asymmetry in mobile termination rates between larger and smaller operators, Cell C became a net payer of termination, rather than a net receiver.
According to Knott-Craig, there is something wrong with the situation where the smaller operators are paying towards the bottom-line of the larger ones.
Asymmetric termination rates is where some operators (in this case the smaller ones such as Telkom Mobile and Cell C) can charge larger networks more to terminate calls on their networks.
“Icasa has done a good job [in reducing termination rates], but could have provided much more asymmetry,” Knott-Craig said, saying that it gives them as a smaller player more muscle to take on Vodacom and MTN.