Cell C says that its revenue market share in South Africa has declined since 2010, when Icasa’s MTR regulations were first introduced.
The South Gauteng High Court ruled at the end of March, that the 2014 new call termination regulations issued by the Independent Communications Authority of South Africa (Icasa) are “unlawful and invalid”.
However, the declaration of invalidity was suspended for six months, meaning that the new rates kicked in on 1 April 2014, as planned. However, Icasa has been granted six months within which to review them.
Among other things, the current regulations cut mobile termination rates (MTRs) to 20 cents per minute, while allowing asymmetry of up to 44 cents per minute.
Under the ruling, for the next six months, Cell C and Telkom Mobile will be allowed to charge Vodacom and MTN significantly more to place to calls to their networks than Vodacom and MTN can charge them.
In documents it submitted to the high court, Cell C said that its total service revenue market share was approximately 10% (June-October 2013). “When the 2010 Regulations were first introduced, Cell C’s service revenue market share was approximately 10.3% (December 2010),” it said.
South Africa’s third operator said it has done its utmost to create more competition in the market.
“Cell C believes it has led the way in creating a more dynamic retail pricing environment. However, it has made considerable financial sacrifices in an attempt to grow revenue market share and so to increase its scale,” it said.
The operator, however, argued that it has still not been able to grow enough to enable it to build sufficient economies of scale, and to acquire a larger revenue share of the market.
It said that MTN and Vodacom continue to hold between them almost 90% of total revenue in the mobile communications space in SA.
Cell C put Vodacom’s revenue market share at 52.4% in 2010, with MTN’s at 37.3%. In 2012, its estimates Vodacom’s revenue market share to be at 51.6%, with MTN’s at 38.1%, while Cell Cs market share was estimated at 9.2%.
This is according to the court documents.
Cell C noted that there is insufficient reported data from the other operators to be able to provide an estimate of market share for 2013.
It said that the consequences of its potential relegation to being an uncompetitive operator is uncertain. “However, this could still result in market failure”.
Cell C argues that revenue market share, rather than subscriber market share, is a better indicator for sustainability in the mobile industry “because operators require a significant upfront investment and on-going investments for a network, IT billing systems, Customer Care, Distribution points, sustainable Channel Partners, Brand and Customer Retention”.
These investments would only be recovered by a sustainable scale level, i.e. approximately 20-25% revenue market share, it said.