CELLPHONE operator Cell C has criticised the proposed new mobile termination rates‚ which it expects will cut its income‚ saying it is considering its options to have them revised. The company stopped short of saying it would take legal action against the Independent Communications Authority of SA (Icasa).
MTN and Vodacom made similar comments earlier this year and followed up with a successful challenge to the regulator’s termination rates.
Last week‚ Icasa proposed new mobile termination rates – the fees operators pay to carry each other’s calls – over the next four years‚ from 20c to 8c in 2018. But asymmetric termination rates will allow small firms such as Cell C to charge bigger rivals over and above the normal rate. Asymmetric rates were introduced to help small operators grow.
The rate the small operators charge will decline to 30c from 44c‚ effective from next month until February. It will further decline to 22c from March next year‚ 16c in 2017 and 10c in 2018. The proposed rates came after the court ruled that the rates introduced early this year were invalid and unlawful.
Cell C believes asymmetry is needed to transform the mobile network landscape that MTN and Vodacom dominate.
The two dominant players control about 80% of the cellphone market. But the proposed new asymmetric rate will result in a significant cut in income for Cell C.
The privately held group does not publish detailed financial information‚ and on Tuesday declined to comment on the likely effect of the cut in termination rates.
It is estimated that had the termination rates remained at 44c until March next year‚ Cell C would have earned as much as R700-million for a year.
Cell C chief executive Jose dos Santos said the company was “disappointed by the dramatic U-turn Icasa has made” with regard to asymmetric rates.
“The massive proposed reduction in asymmetry completely eliminates any pro-competitive remedy.
“Icasa is proposing a marginal cost recovery‚ which is not – in terms of many international benchmarks and literature – the basis on which asymmetry was determined and which would have the effect of entrenching the duopoly‚” Dos Santos added.
While Cell C will benefit from the asymmetric rate for the next three years‚ an analyst said recently that given the large traffic volumes of its rivals‚ the mobile operator would probably remain a net payer. MTN SA and Vodacom said they were still “studying” the new rates. But Vodacom spokesman Richard Boorman said the company would “engage with Icasa to better understand the basis of the rates in the later years‚ particularly year four”. Analyst Kate Turner-Smith said “the rates … will have more impact on Vodacom than MTN”. — BDLive
Cell C lambasts Icasa’s decision
MTN and Vodacom made similar comments earlier this year and followed up with a successful challenge to the regulator’s termination rates.
Last week‚ Icasa proposed new mobile termination rates – the fees operators pay to carry each other’s calls – over the next four years‚ from 20c to 8c in 2018. But asymmetric termination rates will allow small firms such as Cell C to charge bigger rivals over and above the normal rate. Asymmetric rates were introduced to help small operators grow.
The rate the small operators charge will decline to 30c from 44c‚ effective from next month until February. It will further decline to 22c from March next year‚ 16c in 2017 and 10c in 2018. The proposed rates came after the court ruled that the rates introduced early this year were invalid and unlawful.
Cell C believes asymmetry is needed to transform the mobile network landscape that MTN and Vodacom dominate.
The two dominant players control about 80% of the cellphone market. But the proposed new asymmetric rate will result in a significant cut in income for Cell C.
The privately held group does not publish detailed financial information‚ and on Tuesday declined to comment on the likely effect of the cut in termination rates.
It is estimated that had the termination rates remained at 44c until March next year‚ Cell C would have earned as much as R700-million for a year.
Cell C chief executive Jose dos Santos said the company was “disappointed by the dramatic U-turn Icasa has made” with regard to asymmetric rates.
“The massive proposed reduction in asymmetry completely eliminates any pro-competitive remedy.
“Icasa is proposing a marginal cost recovery‚ which is not – in terms of many international benchmarks and literature – the basis on which asymmetry was determined and which would have the effect of entrenching the duopoly‚” Dos Santos added.
While Cell C will benefit from the asymmetric rate for the next three years‚ an analyst said recently that given the large traffic volumes of its rivals‚ the mobile operator would probably remain a net payer. MTN SA and Vodacom said they were still “studying” the new rates. But Vodacom spokesman Richard Boorman said the company would “engage with Icasa to better understand the basis of the rates in the later years‚ particularly year four”. Analyst Kate Turner-Smith said “the rates … will have more impact on Vodacom than MTN”. — BDLive
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