Vox Telecoms says the drastic cut in interconnect rates will only affect it for the next year-and-a-half as it moves its current customers onto its own network.
The Independent Communications Authority of SA (ICASA) stunned the market recently when it dropped interconnect rates for mobile and fixed lines. Interconnect is now set to drop to 40c by 2012.
CEO Tony van Marken says, although the company was affected by its decision to freeze renewal of SIM cards over the next six months, while waiting for interconnect rates to be finalised, this is “short-term pain for long-term gain”. He says: “We have a network, and a plan, and a strategy.”
The company saw revenue and profit down in the half year to February, because connection incentive bonuses dropped from R37.7 million last year to R3.4 million this year.
However, Vox is converting its least-cost routing customers to its Cristal network, which will bolster margins once the migration process is complete. So far, 28% of minutes sold are on its own network, with the balance being routed through other network operators.
Margin gain
ICASA's decision to allow geographic number portability from Monday will also benefit the company, Van Marken explains.
Vox has about 15 000 corporate customers, and Van Marken says this base can now be offered the company's entire bundle of offerings. Previously, customers would have had to change numbers, which was a hurdle that prevented Vox from penetrating its customer base as deeply as it would have liked.
Van Marken expects some teething problems, but says geographic number portability is a large piece of regulation that opens up huge potential.
The company has also launched new products to the market, and will continue to innovate. During the half-year, it developed Periscope, a virtual private network offering; Zeppelin, a 4Mbps wireless link product; and Vox Cocktail, which is a blended ADSL offering.
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