What Vodacom, MTN are hiding from you: Cell C CEO

Cell C CEO Jose dos Santos wrote in a Business Times column that Vodacom and MTN are hiding the truth from consumers, and that they are a duopoly set on keeping prices high and stifling competition.

This column follows the decisions of Vodacom and MTN to take the Independent Communications Authority of South Africa (Icasa) to court to set aside the new call termination regulations, 2014.

Icasa released its “Call Termination Regulations, 2014” on 29 January 2014, which will see mobile termination rates (MTR) reduced from the current 40c per minute to 10c per minute over the next three years.

The regulations further call for significant asymmetry, up from the current 10% to 120% from March 2014, 180% from March 2015, and 300% from March 2016.

These regulations will benefit Telkom and Cell C, but will cost Vodacom and MTN hundreds of millions of rands in lost revenue.

Vodacom and MTN argue that the regulator did not follow the right procedures and processes to develop the regulations, and are challenging the regulations in court.

This decision resulted in a war of words between Vodacom and MTN on one side, and Cell C, Telkom and the minister of communications on the other.

In the latest attack, Cell C CEO dos Santos argued that Icasa fulfilled its mandate to look after the interest of consumers, but that Vodacom and MTN are fighting to maintain their high prices and super-normal profits.

Dos Santos added that Vodacom and MTN are hiding the truth from consumers to keep competition at bay.

He said that Vodacom and MTN argue that Icasa did not base their call termination decision on costs.

“But what they don’t say is that despite requests from Icasa to provide their costs to calculate the appropriate price controls, MTN and Vodacom did not do so,” said dos Santos.

He added that “that less than 5% of calls made by MTN and Vodacom customers land on either Telkom Mobile or Cell C’s network, and are then subject to asymmetric rates.”

“While they lose on income, they fail to mention the saving on costs. Asymmetry will barely touch their bottom line…” said dos Santos.

He said that asymmetry is needed to promote competition, and that it is “not a subsidy as MTN and Vodacom would have you believe”.

Vodacom and MTN were asked for comment regarding the accusations by the Cell C CEO, but they did not respond by the time of publication.

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What Vodacom, MTN are hiding from you: Cell C CEO