Telkom has added R321 million to its profit line thanks to fixed and mobile termination rates, and only had to pay out R33 million in the first six months of the year.
In the period to September, the operator reported net profit of R1.16 billion, of which termination rates contributed R321 million, almost double the R115 million in gained last year.
This gain is in sharp contrast to the effect of termination rates at rival Vodacom - SA's largest mobile operator - which saw a R600 million loss on its bottom line in the first half of the year. Vodacom, which paid out R1 billion in termination fees in the six months to September, expects its loss to grow to R1 billion by year-end.
However, the operator noted it would be hardest hit this year as it is the first year of the glide path and the impact will slow from next year.
Of the loss made by Vodacom, about three-quarters is paid out to Telkom, with Cell C earning the balance. CFO Deon Fredericks says Telkom may pass more of the benefit through to consumers than it had done previously.
Should Telkom pass on its termination win, this would result in call costs coming down.
Telkom's benefit comes thanks to the Independent Communications Authority of SA's (ICASA's) April rate cut, which was thrown out by the South Gauteng High Court, which ruled, at the end of March, those contested termination rates were invalid, but would be in force until the end of September.
The regulator's April rates heavily favoured smaller players Cell C and Telkom Mobile. From April, mobile termination rates for Vodacom and MTN dropped to 20c - half the previous rate - while Cell C and Telkom Mobile were able to charge the two larger players more than double that (44c) to terminate calls on their network.
Towards the end of September, the regulator decreed mobile termination rates would remain at 20c until next September, after which they would drop to 16c, and then 13c in the final year to September 2017. Cell C and Telkom Mobile will now be able to charge the duopoly 31c to terminate calls on their networks, which then drops to 24c and then 19c at the end of the glide path.
The impact of the new rates on MTN's figures will only be revealed when it reports its full-year results some time in March.
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