Telkom’s big score

The Independent Communications Authority of South Africa (Icasa) unveiled new call termination rates on 29 January 2014, which will see mobile and fixed termination rates cut from 40c to 10c over the next three years.

The current termination rate for mobile calls is R0.40 per minute, while fixed calls are charged between R0.19 and R0.12 per minute.

A significant measure of asymmetry will also be introduced (for mobile calls), starting at 120% in March 2014, increasing to 300% in March 2016.

This is the second set of significant MTR cuts, following reductions over the past 5 years which saw the price per minute drop from R1.25 per minute to R0.40 per minute.

The biggest benefactor of the lower mobile termination rates is Telkom. Icasa recently said that Telkom’s net position has improved by 37 per cent based on the termination rate reduction over the past few years.

The impact of lower mobile termination rates on Telkom is illustrated in the following graph from Icasa’s presentation to parliament.

Impact of rate reduction on Telkom
Impact of rate reduction on Telkom

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Telkom’s big score