MTN may be forced to take legal action against Cell C, following a legal dispute around community service telephones and millions in unpaid interconnection fees, it says.
The cellular giant is in discussions with rival Cell C over the roll-out of its 52 000 community service telephones (CSTs). While it hopes to resolve the issue amicably, it may follow legal proceedings to have the "illegal" telephones removed, it says.
MTN would not disclose the financial impact of the dispute. However, Cell C argues MTN owes it R200 million - the difference between the R1 billion MTN owes Cell C and the R800 million Cell C owes MTN.
Court ruling
MTN took the Independent Communications Authority of SA (ICASA) to court in September 2004, claiming Cell C's roll-out was illegal as it was not restricted to rural and poorer areas, as intended.
Cellular operators are obliged to provide CSTs as part of their licence agreement with the Independent Communications Authority of SA (ICASA).
MTN's head of regulatory affairs Nkateko Nyoka says MTN was forced to subsidise Cell C's commercial operations. Cell C charged CST rates to its customers in areas where it should be charging commercial rates, short-changing MTN on the interconnect rates, he says.
The mobile operators charge each other an interconnect fee of R1.25 per minute for commercial transactions and 6c per minute for CST calls.
Cell C's defence was that the roll-out plan was based on maps approved by ICASA, says head of communications Vanashree Pillay.
ICASA conceded to the court it had not "applied its mind" in approving Cell C's roll-out plan, she says. "The judge says Cell C was not to blame [for the problem]."
Pillay adds Cell C is waiting for ICASA to provide guidance on the way forward.
Price discrimination
In April 2005, Cell C complained to the competition authorities that MTN was "abusing its dominant position in the market and using its muscle to hurt Cell C's bottom line by challenging our roll-out and withholding interconnection fees".
The company says MTN did this selectively, as it did not take the same approach with Vodacom.
MTN's GM of regulatory affairs Graham de Vries says he was "surprised" by Cell C's submission to the competition authorities. "MTN is surprised Cell C holds the views that they do."
The commission is expected to decide by the end of this month whether to refer the matter to a higher authority, the tribunal.
ICASA had not responded to ITWeb's request for additional information by the time of publication.
Related story:
MTN rubbishes Cell C claims
Share
