Icasa Offers Relief for Cellular Callers; Zz Draft Regulations Are Tough on the Giants

Article excerpt

BYLINE: Asha Speckman

CONSUMERS look set to be the ultimate winners when the telecommunications industry shifts to reflect new call termination regulations.

The proposed reductions in call termination rates in the draft regulations released last week are an inflection point for incumbents Vodacom and MTN, while encouraging smaller operators Cell C and Telkom Mobile to threaten aggressive cuts in retail prices.

The Independent Communications Authority of SA (Icasa) has proposed that interconnection rates be halved to 20c a minute by March next year. By 2016, this would drop to 10c. Interconnection rates are what operators charge to connect calls on each others' networks.

This is the second three-phase plan introduced by Icasa. The first was implemented in 2010 and concluded this year.

Lower interconnection rates are expected to foster greater competition between operators and ultimately result in lower prices for consumers.

"South Africa will still be lagging behind international best practice. However, since the mobile termination rate will drop to 20c in March 2014 this is within acceptable boundaries," Christoph Stork, a senior researcher at Research ICT Africa, said.

Market reaction yesterday showed that the proposed cuts were steeper than expected.

Vodacom stock shed the most in more than three months, falling nearly 7 percent in intraday trade to R115.60 on the JSE. It recovered slightly to close 6.26 percent down on the day at R116. MTN had its biggest decline since September 2 as it traded 3.79 percent lower at R191.55 by mid-afternoon before closing 3.06 percent down on the day at R193.

In comparison, shares in fixed-line services operator Telkom reached as high as R27.09 in intraday trade and closed the session 5.03 percent ahead at R26.50. …