Telkom lost out on R640 million in revenue after mobile termination rates were voluntarily cut by network operators from March.
The company yesterday presented its results for the first half of the year. It said interconnect revenue will be hampered further as the glide path recently announced by the Independent Communications Authority of SA comes into effect.
However, Telkom also benefited by paying out R616 million less to mobile operators, leaving it with a net interconnect loss of R24 million.
Mobile operators voluntarily cut rates from R1.25 a minute to 89c, with effect from March. Last month, the authority said mobile termination rates will drop from March next year to 73c at peak and 65c during off-peak times.
The following year, rates will drop to 56c and 52c. By March 2013, wholesale mobile terminations rates will drop to 40c, regardless of the time the call is made.
Interconnect costs for local fixed-line calls will drop to 20c for peak and 12c for non-peak next March. Termination rates for nationwide calls will drop to 28c during peak times, and 19c off-peak. In 2012, termination of local calls will drop to 15c and 12c, respectively, while national calls will see a drop to 25c and 19c.
Telkom acting CEO Jeffrey Hedberg says mobile-to-fixed interconnect income slowed 5.3%, to R252 million, as a result of people using mobiles to phone other cellphones instead of fixed lines.
In addition, as competitors use alternative international gateways, calls to international mobile phones declined, dropping interconnect revenue from calls to international cellphones 69.2%, to R104 million, says Hedberg.
International interconnect revenue declined 54.4%, to R346 million. Telkom's total interconnect revenue declined 37.4%, to R912 million, bolstered by a 118.8% improvement in fixed domestic interconnection to R210 million.
Hedberg says Telkom will revisit its pricing to win business back and limit the effects of lost interconnect revenue.
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