MTN, Vodacom sink on rate cuts
Shares in mobile operators, MTN and Vodacom fell sharply in trade on the JSE on Wednesday (29 January), after the Independent Communications Authority of South Africa (Icasa) announced new call termination rates (CTRs).
Unsurprisingly, Telkom moved the other direction as the announcement would benefit the firm.
CTRs refer to the fee that one network charges another for receiving and terminating calls on its network. These rates have declined from R1.25, in 2009, to a current price of 40 cents.
According to the new regulations, the rate will drop to R0.20 from 1 March 2014, with a further drop to R0.15 in 2015, and R0.10 the following year. This is the rate, per minute, the smaller operators will pay MTN and Vodacom to carry calls.
The cuts for smaller operators like Cell C and Telkom Mobile will remain at R.044, which is the rate both Vodacom and MTN will pay to carry calls from those smaller operators.
At 16:25pm, shares in MTN declined 2.69% or R5.52 to R199.60, while Vodacom was off 3.25% or R3.97 to R118.36. Telkom, meanwhile, added half a percent to R31.63.
Vodacom CEO Shameel Joosub said of Icasa’s decision: “I wish I could say this is a victory for the consumer, but it is far from it. This is a subsidy which, in effect, means that Vodacom will be charged more to call Cell C and Telkom Mobile than the latter will be charged to call Vodacom.”
“This prejudices Vodacom’s customers, and rewards those who have not invested in their networks at the expense of those who have.”
Zunaid Bulbulia, MTN SA CEO said that the group is considering its options following the announcement.
More on CTRs
Telkom to pass on CTR cuts to consumers
Vodacom: Consumers won’t benefit from MTR cuts
Drastic call termination cuts announced
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