{"id":47409,"date":"2013-10-09T23:29:44","date_gmt":"2013-10-09T21:29:44","guid":{"rendered":"http:\/\/businesstech.co.za\/news\/?p=47409"},"modified":"2013-10-10T11:34:21","modified_gmt":"2013-10-10T09:34:21","slug":"mtr-cuts-would-cost-us-r1-billion-mtn","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/mobile\/47409\/mtr-cuts-would-cost-us-r1-billion-mtn\/","title":{"rendered":"MTR cuts would cost us R1 billion: MTN"},"content":{"rendered":"

MTN<\/a> says that proposed cuts in mobile termination rates, as proposed last week by\u00a0the Independent Communications Authority of South Africa (Icasa<\/a>), would cost the group as much as R1 billion.<\/p>\n

This is according to Bloomberg, who reported that Vodacom<\/a> CEO, Shameel Joosub<\/a> declined to quantify the effect of MTRs on the\u00a0company, if\u00a0implemented\u00a0under current proposals.<\/p>\n

Icasa announced on Friday, 4 October 2013, that it wants to cut the costs of terminating a call on a mobile network to R0.10 over the next three years.<\/p>\n

A termination rate is the money networks pay to each other for connecting a call.\u00a0MTRs have declined from R1.25 in 2009 to a current price of 40 cents.<\/p>\n

\u201cThere\u2019s a very real chance that if the fees go through the way they are at the moment, we\u2019ll have to take a significant knife to costs,\u201d MTN’s South Africa CEO Zunaid Bulbulia<\/a> told Bloomberg. \u201cWe would have to take costs out of the business, right across the board. So staffing, commissions we pay, handset subsidies.\u201d<\/p>\n

In\u00a0financial results for the year ended December 2012, MTN group revenue amounted to R135.11 billion, with South Africa making up R41.4 billion of that total.\u00a0Ebitda for the local operation was at R14.5 billion.<\/p>\n

\u201cThere\u2019ll be less revenue for us to reinvest into the business, as we\u2019re subsidizing our rivals,\u201d Joosub said in an interview with Bloomberg.<\/p>\n

In results for the year ended March 2013, Vodacom said that revenue from its South African operation amounted to R58.60 billion, out of a total R69.91 billion. Ebitda for its SA operation amounted to R22.4 billion.<\/p>\n

Speaking at the MyBroadband 2013 conference in Midrand on Wednesday (9 October),\u00a0Bulbulia suggested that constant pushing down of prices would lead to “market failure”.<\/p>\n

He highlighted countries in Europe, as well as India, where as many as 28 out of about 30 operators were unsustainable, leading to a\u00a0unprecedented situation where the market had begun pushing prices back up again to keep those\u00a0companies\u00a0afloat.<\/p>\n

“Whats been proposed is very dramatic in terms of the drop,”\u00a0Joosub told the conference. “The level of asymmetry is ludicrous,” he said, adding that Vodacom\u00a0hoped to find a more amicable solution with Icasa.<\/p>\n

On Monday (7 October), Joosub said: \u201cWe support Icasa\u2019s goal of reducing mobile termination rates, provided that such a reduction is cost-based. Cuts in mobile termination rates can have a profound impact on both our business and those of our suppliers, franchisees and other stakeholders. We therefore support a managed \u2018glide path\u2019 of reductions over several years.\u201d<\/p>\n

\u201cWe will be responding to Icasa to make the case that the proposed reduction and glide path, which has an initial drop of 50% in March 2014, are too steep and could have serious negative impacts.\u201d<\/p>\n

MTN South Africa\u2019s acting chief corporate service officer, Fusi Mokoena<\/a>, said that the group was reviewing the document and will file a response thereafter.<\/p>\n

\u201cMTN will closely examine the contents of the proposed Regulations and analyse its potential regulatory and economic impact,\u201d Mokoena said.<\/p>\n

Under the proposed regulations, smaller operators such as Cell C<\/a> and Telkom Mobile<\/a> will be afforded preferential termination rates for six years, after which their rates will also be R0.10.<\/p>\n

More on Mobile termination rates<\/h3>\n

Vodacom bemoans asymmetry plans<\/strong><\/a><\/p>\n

Operators mull action on termination rate cuts<\/strong><\/a><\/p>\n

Icasa announces new draft call regulations<\/strong><\/a><\/p>\n

MTN, Vodacom freefall on MTR cuts<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

MTN says that proposed cuts in mobile termination rates, as proposed last week by Icasa would cost the group as much as R1 billion.<\/p>\n","protected":false},"author":10,"featured_media":4815,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"idle","_sma_x_autopost_error":"","_sma_x_post_id":"","_sma_x_attempts":0,"footnotes":""},"categories":[34],"tags":[42,26,36,28,3403,1075,27,3588],"class_list":["post-47409","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mobile","tag-cell-c","tag-headline","tag-icasa","tag-mtn","tag-shameel-joosub","tag-telkom-mobile","tag-vodacom","tag-zunaid-bulbulia"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/47409","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=47409"}],"version-history":[{"count":12,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/47409\/revisions"}],"predecessor-version":[{"id":47438,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/47409\/revisions\/47438"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/4815"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=47409"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=47409"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=47409"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}