Telecoms7.10.2013

Telkom, Cell C win in planned MTR price cuts

Cell C Alan Knott Craig Senior

Cell C CEO Alan Knott-Craig welcomed the draft call termination regulations by the Independent Communications Authority of South Africa (ICASA), saying that it has blasted the way open by drastically reducing the single largest cost factor in prices.

ICASA published its draft call termination regulations on Friday, 4 October 2013. The regulations propose termination rate cuts on a new three year glide path, and introduce bigger asymmetry for smaller operators.

Knott-Craig said that it is encouraging to see ICASA work quickly and efficiently, favouring neither friend nor foe.

“Whilst in actual terms (cents) the asymmetry is lower than what was hoped for, ICASA has been smart in providing asymmetry over a longer period with a relatively gentle glide path,” said Knott-Craig.

“On the other hand it has blasted the way open by drastically reducing the single largest cost factor in prices, namely the MTR (mobile termination rate) which both Vodacom and MTN enjoy, noting that today these two operators control more than 90% of the mobile market revenue.”

Knott-Craig said that Telkom is the biggest winner in the new draft call termination regulations.

“Of all the players, Telkom (fixed line) wins hands down. And I do not begrudge them that,” said Knott-Craig. “They have played a major role in establishing the current healthy mobile industry.”

The Cell C CEO said that whilst his first instinct is to challenge ICASA, they have had to tread a fine line between under-reacting and over-reacting.

“They have cleverly done what they needed to do to make it possible for the telecommunications market in South Africa to gain a semblance of normality,” said Knott-Craig.

“I would have wished for a better outcome for Cell C, but individual interests aside, the market will be a more competitive and balanced one with ICASA’s proposed draft regulations on termination rates as they have currently proposed them.”

More needed

Knott-Craig said that it is important to note that this is just the first regulatory step in normalising the South Africa telecommunications space.

“There is much more to come, and the competition is going to be fierce. Cell C needs more market share, and we will only gain that through aggressive pricing and good network quality,” said Knott-Craig.

“Price is the easy bit, and we are still on track for adding masses of capacity and drastically improving network quality by November this year to cater for the dramatic increase in traffic,” he added.

“We are fighting for an even playing field to compete on. And we are winning, because we absolutely believe in our cause.”

More on ICASA MTR regulations

New draft call regulations from Icasa

DoC deadlines: prepare to be impressed

ICASA Amendment Bill – risks and rewards

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