MTN's costs to terminate calls on its network are far higher than the proposed 78c blended interconnect fee it has agreed to implement with Vodacom.
This is according to MTN SA MD Karel Pienaar, speaking during an interview with ITWeb late yesterday afternoon. While Pienaar would not disclose how much it actually costs MTN to terminate a call on its network, he says the blended rate will not cover those costs.
Last Friday, MTN and Vodacom announced they had come to an agreement on a lower interconnection rate starting at 78c, which would scale to 61c a year later. Pienaar says he is looking at where other costs can be cut to accommodate the agreement.
However, neither MTN nor Vodacom have yet submitted the proposed reduction to the Independent Communications Authority of SA (ICASA), which has the right to review the cost and can either accept or deny the rate.
It is unlikely the regulator will prevent a lower interconnection rate, even though many in the industry consider the mobile operators' move to be a token gesture.
The lower interconnect fee will be difficult to implement for the mobile operators, since Cell C is calling for a 40% reduction across the board and hopes to receive a lower figure than that agreed between MTN and Vodacom.
However, Pienaar said additional discussions held early this week with the Department of Communications may have helped to unplug the Cell C “bottleneck”.
Local alternative player and champion of the interconnect saga ECN says it is not practical for the cellular operators to implement a unilateral cut.
He says it is unrealistic for the companies to try implement their proposed rate without having the rest of the industry on board with the idea.
Meanwhile, Pienaar said MTN fully supports the regulator's proposed cost-based interconnection rate; however, he has called on consumers and industry stakeholders to allow the company to lower rates gradually.
He noted that the current drop will indirectly affect the roll-out of 3G services in certain rural areas that the company planned to implement over the next year. However, the investment in the national fibre network will continue.
“I seriously went back to the commitment in the roll-out of the national fixed infrastructure to see if we could back out of any of them, but those commitments were made months ago and we will go ahead with [them].”
Pienaar added that MTN is looking at ways to bring down costs to the consumer, since it has noticed “involuntary churn” during the economic downturn, as people simply can not afford to use their phones.
The company's recently introduced MTN Zone promotion discounts calls in low volume areas by up to 100%.
Pienaar defended MTN's position by pointing out that mobile operators have not increased call costs since they were established.
Share
