There is no disconnect in CEO statements: MTN

MyBroadband recently published an article titled “MTN CEO vs MTN SA CEO – what is the truth?”, highlighting statements made by the two MTN executives which seem to contradict each other.

The article focused on statements made by MTN SA CEO Zunaid Bulbulia and MTN Group CEO, Sifiso Dabengwa related to the company’s legal battle against the call termination regulations, 2014.

MyBroadband contacted MTN for comment regarding the statements, but the company did not provide feedback by the time of publication.

However, after the article was published MTN Group responded, saying that there is no disconnect in the statements made by executives of MTN.

For the sake of accuracy the statements given in the article are provided, with the company’s comments following these statements.

MTRs and retail rates

  • In a column on 20 February 2014 Bulbulia wrote that “there is no direct link between retail and wholesale (termination) rates”.
  • However, in a Business Day TV interviewon 5 March 2014 Dabengwa said that “over time lower retail rates will follow lower mobile termination rates”.

MTN Group comment

MTN believes there’s alignment between statements made by MTN SA CEO Zunaid Bulbulia and MTN Group President and CEO, Sifiso Dabengwa, on termination rates.

In this regard, the statement attributed to Mr Bulbulia, wherein he stated that “there is no direct link between retail and wholesale (termination) rates” is echoed by Mr Dabengwa when he stated in his interview with Business Day TV that “there is an exaggeration on the implications of MTR on retail rates.”

Mr Dabengwa further goes on to state that “it does not follow that reducing MTRs is going to necessarily have a reduction in retail rates”. In his concluding remarks on the issues, he reiterates that there’s “…exaggeration on cause and effect”.

These statements are indeed correct in that there is no direct causal link between one input cost (i.e. termination rates) and the end-user retail tariff, as retail tariffs are a function of many other factors, including the competitive landscape within which tariffs are charged.

The attempts in your article to show discord between these statements are both selective and mischievous.

Impact of new call termination regulations on MTN SA

  • 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. The yearly loss, it follows, will be R1.7 billion.
  • In his Business Day TV interview Dabengwa said that the impact will be “anywhere between R500 million and R1 billion from a top line point of view”.

MTN Group comment

Similarly, your conclusions that the “numbers are not the same” and therefore to be questioned are unfair and incorrect. The numbers quoted by MTN are estimates rather than final and conclusive.

To this end, MTN stands by the statements made in its court papers relating to the financial impact of the decision by ICASA.

There are a variety of ways that financial impact on a company can be expressed including mentioning the revenue impact of the 2014 regulations as per Mr Bulbulia and the approximate net interconnect margin impact of the 2014 regulations “from a topline point of view”.

More on mobile termination regulations

While others talk, we deliver: MTN SA CEO

Stop hurting South Africa: Telkom CEO to Vodacom, MTN

Vodacom institutes legal action against Icasa

MTN warns Icasa: scrap MTR price cuts

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There is no disconnect in CEO statements: MTN