Vodacom: MTRs could cost us R1 billion
South Africa’s Vodacom plans to launch a legal challenge against a regulatory cut in fees mobile carriers are allowed to charge each other, its chief executive said on Wednesday.
Shameel Joosub also told analysts on a call the planned cut in mobile termination rates by South Africa’s communications regulator could cost the company 1 billion rand ($90 million) in the 2015 financial year.
In the same call, group CFO Ivan Dittrich said that the company is in negotiations with its global suppliers for lower prices in light of the weaker rand currency.
Quarterly results
Vodacom said that revenue in its third quarter rose by more than 10 percent after strong data sales.
The unit of Britain’s Vodafone also gained 12.3 percent more customers to bring its total of active users across Africa to 56 million. It is fighting to maintain dominance in South Africa and increase its influence on the continent.
Revenue totalled 20.2 billion rand ($1.82 billion) in the three months to end-December. Data revenue jumped 40 percent to 3.6 billion rand, it said.
Earnings could come under pressure this year after South Africa’s telecoms regulator halved the fees mobile phone companies can charge rivals to use their networks.
Vodacom may take the most pain from the move, given its dominance of the South African market and its reliance on contract customers, who tend to retain their contracts at cheaper rates.
Vodacom, which also has operations in Mozambique, Lesotho, Nigeria, Tanzania and the Democratic Republic of Congo, is also trying to muscle up on the continent, where it lags MTN and India’s Bharti Airtel.
Last year, Vodacom said it would pay $250 million to raise its stake in its Tanzanian business to more than 82 percent.
Its shares are down 10 percent so far this year, after gaining about 7 percent in 2013.
($1 = 11.1242 South African rand)
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