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Vodacom, MTN yield to MTR process

Bonnie Tubbs
By Bonnie Tubbs, ITWeb telecoms editor.
Johannesburg, 14 Apr 2014
Vodacom and MTN say they will cooperate with ICASA over the next six months as the regulator reviews its contested termination rate regulations.
Vodacom and MTN say they will cooperate with ICASA over the next six months as the regulator reviews its contested termination rate regulations.

A decision taken by South Gauteng High Court judge Haseena Mayat on inter-network fees will remain unchallenged - allowing for the Independent Communications Authority of SA's (ICASA) termination rate regulation review to proceed without the fear of legal interference.

SA's mobile leaders Vodacom and MTN say they will not appeal the 31 March High Court ruling allowing ICASA's new mobile termination rates (MTR) to come into effect for six months as of 1 April (despite regulations being deemed invalid and unlawful), while the regulator carries out a cost study before bringing its regulations in line with the law.

MTRs are the fees mobile operators pay each other to carry calls on their networks. Since the beginning of this month, the regulated rate has been 20c (half the MTR for 2013) for terminating calls on Vodacom and MTN's networks, while Cell C and Telkom Mobile can charge the two 44c to terminate calls on theirs.

Court battle

ICASA's new MTR structure was introduced at the end of January, when the regulator published new regulations. These included a three-year glide path and steep asymmetry in favour of later mobile entrants.

MTN and, shortly afterwards, Vodacom submitted urgent applications to the High Court in Johannesburg, requesting an interdict and review of ICASA's new rates, which they feel were not objectively reached.

Following the two-day court case between ICASA and SA's two leading operators, which hold a combined +80% of the market, Mayat downed her gavel on the decision that both parties have a case.

ICASA's new structure, which would have ended in Vodacom and MTN being charged four times the MTR rate they would have received in return in 2016 (40c to10c).

Operator cooperation

Vodacom has confirmed it has no plans of appealing the ruling. Shortly after the ruling was given, the company said it would review how the financial impact from the rate cuts would translate in terms of its investment plans, and how to minimise the impact on its customers.

"In terms of next steps, we're looking to work with the regulator to ensure that a smooth costing process takes place within the allotted six-month timeframe.

"We do, in particular, have concerns about the level of asymmetry as it is prejudicial to our customers and amounts to a subsidy for Cell C and Telkom Mobile."

MTN SA head Zunaid Bulbulia confirmed this morning that MTN would not appeal the court ruling.

"MTN has implemented the mobile termination rates as per the court ruling and shall work with the regulator in a constructive and consultative manner in any process underpinned by objective principles."

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