MTR spat tarnishing mobile industry: Vodacom

Shameel Joosub, Vodacom Group CEO, says that the current spat between mobile operators over mobile termination rates (MTRs) is making the industry look bad.

MTRs are the fees operators charge one another when calls from one network have to be routed to another.

The Independent Communications Authority of South Africa (Icasa) is expected to implement new call termination rates on 1 April 2014, however, both Vodacom and MTN have initiated court proceedings against Icasa.

Vodacom believes that Icasa has not followed a fair and objective process to determine the final termination rates in its call termination regulations 2014.

Speaking to CNBC Africa, Joosub said: “By law, the regulator has to go and do a proper cost study to come up with the result.”

“We know a proper cost study hasn’t been done because, to be able to do it, you have to request certain information with us, and you also have to share the information, the cost principles with the industry beforehand. None of that has happened.”

Joosub said that the strategy that the group was currently undertaking included heavy investment into the group’s network. He said that implementation of the new MTRs would cost the company billions per year.

“Something has got to give…our level of investment that we are putting in, slows down.”

The new regulations aim to significantly reduce mobile termination rates from its current level of 40c/minute to 10c/minute by 1 March 2016, with high levels of asymmetry for smaller operators.

This means Cell C and Telkom Mobile would be able to charge Vodacom and MTN more for sending calls to their networks than the larger networks could charge them.

The argument between the major operators – including Telkom, MTN SA, Cell C, and Vodacom – has escalated to a point where the chief executives have made their voices heard publicly, either via an ‘open letter’ or, in Cell C’s case, an advertising campaign questioning the “greed” of giant cellular networks.

“Going into the papers, taking out full paid ads, it’s just making the industry look bad. I think what we need to do is deal with is the essence of the issue,” Joosub told CNBC Africa.

“That’s why we are saying….let’s take an interim cut, and let’s use the time to do a proper study and arrive at a proper result.”

The chief said that Vodacom has invested R70 billion into its network over the past 20 years, and more than R30 billion over the past six years alone.

“So next year we are going to invest R9 billion,” Vodacom’s chief exec said.

Joosub said that, in spite of the very public spat, dialogue continues between the concerned parties. “It’s not an easy process because people are coming from very different positions.”

He did point out that, while a call rate subsidy was put into place for early operators, “one can argue that 14 years later, Cell C shouldn’t deserve a subsidy”.

Joosub said that the next step would be to find a solution, and failing that, the company would go to court on 25 March.

More on MTRs

Stop hurting SA: Telkom CEO to Vodacom, MTN

Cell C slams MTN with new ad campaign

Vodacom drags Icasa to court over MTRs

We’ve dropped our prices 22%: Vodacom

Must Read

Partner Content

Show comments

Trending Now

Follow Us

MTR spat tarnishing mobile industry: Vodacom