Concern as Icasa seeks to hike licence fees
TELECOMS companies are facing multimillion-rand hikes in licence fees under new regulations which will greatly increase annual costs.
The new regulations will level the playing field by ending the mish-mash of fee structures, but costs will surge across the board. Analysts predict that consumers will suffer as operators pass on those higher fees, and litigation is already looking likely.
MTN and Vodacom at present pay 5% of their net operating income in SA for their licences.
The Independent Communications Authority of SA (Icasa) has proposed changing that to 3% of their gross revenue, minus allowable deductions. Vodacom’s fees could soar from about R740m to R1,2bn a year, while MTN’s would shoot up from R500m to more than R800m.
Icasa is understood to think that MTN and Vodacom will emerge better off, but calculations based on this year’s financial figures show that is untrue.
“We are quantifying and assessing the impact the proposed licence fee regulation would have on MTN and we will finalise our submission before the new deadline,” said MTN’s chief corporate service officer, Zolisa Masiza.
Smaller companies will also be hit hard, with voice and data carrier ECN calculating that its fee will rise from R100000 a year to R3m. ECN pays just 0,1% of its annual revenue for a licence now, but faces a 30-fold increase under the proposed 3% rate.
ECN will turn over about R100m this year, but its fee would rise by “an outrageous percentage”, said its head of regulatory affairs, Jeremy MacDonald.
Dominic Cull of the Internet Service Providers’ Association said Icasa was trying to introduce an equitable structure, but the consequences would be dire for smaller internet players now paying just 0,1%. “I very much doubt the fee will end up at 3%,” he said.
“I think there will be litigation before the ink is dry.”
Icasa has said the fees are structured in a way that promoted competition and does not create a barrier to entry, since start-up operators with a revenue of less than R1m will pay a lower fee to help them survive.
Yet it has also proposed charging R250000 for any amendments to a licence, such as a change in shareholding. That bore no relationship to the true cost of administering such a change, ECN’s MacDonald said.
“If Vodacom changes its shareholding then a fee of R250000 isn’t the end of the world, but for new entrants it’s going to discourage investments and consolidation, which are both essential to competition.”
He questioned why Icasa needed to raise billions of rands in licence fees, when its expenditure was only about R250m last year. Icasa has justified the increase by saying its costs will rise by 24% a year for the next five years.
The fees would be a set-back for smaller voice and data carriers, which would be forced to pass on the higher costs to consumers, said ECN’s CEO John Holdsworth.
One former Icasa councillor said she was concerned about the proposed new fees and the way they would affect various players, with the fees paid by Telkom, Cell C and Neotel rising disproportionately. “If this goes through as is, this will affect all the industry,” she said.
Icasa has called for comments on its proposals, but has only given companies until next Friday to submit their views.
ICASA licensing fee discussion
Loading ...