Cell C says that it may have to increase prices in the event that there is no certainty around the effective date of the 2014 call termination rate regulations.<\/p>\n
Cellphone network operators MTN and Vodacom are challenging the introduction of new asymmetrical call termination rates.<\/p>\n
These are the rates operators have to pay one another for calls to other networks.<\/p>\n
Icasa wants to implement a set of regulations that will see these rates drop to 10 cents a minute in 2016.<\/p>\n
But, for 2014, MTN and Vodacom will have to pay 44 cents a minute to smaller operators, while the smaller companies will have to pay only 20 cents, in an asymmetrical structure.<\/p>\n
MTN and Vodacom want the 2014 regulations scrapped. Alternatively, they want interim relief to prevent the introduction of the new rates until they have been reviewed.<\/p>\n
A court ruling is expected on Monday (31 March) while Icasa’s implementation date is on Tuesday, 1 April.<\/p>\n
In court documents, Cell C said: “The only realistic alternative available to Cell C in the event that there is no certainty around the effective date of the 2014 Regulations, would be for Cell C to increase retail tariffs more in line (although still below) those of the dominant operators.”<\/p>\n
“This would remove downward pressure on MTN’s and Vodacom’s retail tariffs, but also remove Cell C’s ability to grow market share.”<\/p>\n
South Africa’s third operator said that tariff increase would be a true structural change that would operate to the detriment of the consumer and the South African economy as a whole, “but it would be necessary in order for Cell C to remain in the market, albeit in a less sustainably competitive position”.<\/p>\n
“The consequences of Cell C’s potential relegation to being an uncompetitive operator is uncertain (although of course it is clear that there will continue to be a MTN\/Vodacom duopoly). However, this could still result in market failure,” it said.<\/p>\n
The group added that it is unlikely that such a structural change could be reversed even if Icasa should once again apply pro-competitive remedies.<\/p>\n
The group said that a delay “impacts significantly on Cell C’s ability to finance further network investment and to offer further competitive services. I cannot emphasize too many times the significance of this as a concern of Cell C’s auditors and its financiers”.<\/p>\n
“Any material delay in the implementation of the 2014 Regulations will, as a result, have additional devastating effects on Cell C’s business. These effects can be grouped into four main categories: creditors, customer care, network and technical matters, and negotiating power,” it said.<\/p>\n
Cell C fighting for its life: report<\/strong><\/a><\/p>\n Is Cell C making money?<\/strong><\/a><\/p>\n Cell C\u2019s Knott-Craig warns backers may stop investing<\/strong><\/a><\/p>\n