MTN’s R286 million gift from Icasa

The Independent Communications Authority of South Africa (Icasa) said in a press statement on Friday, 14 February 2014 that it has decided to delay its call termination rate cuts by two months.

The new call termination rates were set to kick in on 1 March 2014, but after MTN initiated court proceedings against Icasa on 12 February 2014 the regulator postponed the implementation date to 1 May 2014.

Icasa said that it decided on the postponement so that the urgent application MTN lodged with the High Court could be heard on a less urgent basis.

This two month delay can save MTN close to R300 million in potential interconnect revenue losses.

In its court documents, MTN said that the new 2014 call termination rates will cost the company R142,931,363 in lost aggregated interconnect revenue per month.

This means that the two month delay announced by Icasa will save MTN R285,862,726.

Even if MTN’s court battle with the regulator is unsuccessful, the two month delay caused by the legal challenge has already paid off handsomely for the mobile operator.

MTN interconnect revenue losses
MTN interconnect revenue losses (from court papers)

MTN not trying to keep prices high: Bulbulia

MTN SA CEO Zunaid Bulbulia said that their decision to take the legal route should not, in any way, be construed as an attempt to keep the costs of telecommunications high.

MTN is of the view that the regulations do not meet these requirements and it has instituted legal proceedings against Icasa.

MTN has asked the Court to review what has happened and to set aside those parts of the regulations which it finds are irregular.

“There is a common goal in the industry to reduce costs and to promote fair competition. Both are good for our customers and for our business,” said Bulbulia.

“MTN believes that the review proceedings which it has brought will ultimately assist Icasa and all the other role players in realising that goal in a proper and commercially sustainable way.”

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MTN’s R286 million gift from Icasa