It’s all about the money

The mobile operators are fighting like cats and dogs about the new call termination regulations, 2014, with Vodacom and MTN in the one corner, and Cell C and Telkom in the other.

MTN launched a legal challenge against the new call termination regulations on 12 February 2014. Vodacom followed suit on 26 February 2014.

Cell C and Telkom, who are in favour of the call termination regulations, hit back through advertising campaigns.

What they say

Vodacom and MTN are arguing that the Independent Communications Authority of South Africa (Icasa) did not follow the proper processes to arrive at the new termination rates.

Cell C hit back, pulling on the heartstrings of South Africans by saying that the legal action is nothing more than trying to avoid increased competition and attempting to keep prices high.

Telkom in turn said that Vodacom and MTN are standing in the way of South Africa’s future by fighting against a more equal playing field.

The simple truth

The simple truth is that it is all about the money. Vodacom and MTN are not unhappy about Icasa’s processes – they are unhappy about the fact that they will lose billions of rands over the next few years, and especially that it will go straight to their direct competitors.

Inadequate or incorrect processes are merely a good legal way to battle the regulations and not lose money through lower termination rates and increased competition through asymmetry.

Telkom and Cell C’s fights are also just about money. They stand to gain most of the billions of rands which Vodacom and MTN will lose.

Telkom and Cell C are basically saying that they need those billions more than Vodacom and MTN.

Who will do the most for SA with the money?

The call termination rates, 2014, which introduces very large asymmetries, mean that some of Vodacom and MTN’s money will flow to Cell C and Telkom Mobile.

So who will do the most with it to benefit South African consumers?

We know that Vodacom is set to invest R9 billion into its network. MTN is also investing heavily in its network to ensure they do not fall behind their main rival.

Cell C has been criticized by consumers for not doing enough to deliver a reliable network. However, it is not clear whether any additional funds will go towards paying debts, paying shareholders, or improving their network.

Telkom Mobile’s future network plans also remain unclear. A network-sharing deal between MTN and Telkom Mobile was signed, which may influence the company’s investment strategy.

The question on who needs the money more will ultimately be answered through the forthcoming legal battles.

It is regrettable that the industry could not reach an agreement which suited most parties, but considering that billions of rands are at stake it is hardly surprising.

More on the call termination regulations, 2014

MTN hits back in termination rate fight

MTN stamps on low prices: Cell C CEO

Cell C to fight MTN’s MTR application