Stop hurting South Africa: Telkom CEO to Vodacom, MTN

Telkom CEO Sipho Maseko took aim at Vodacom and MTN in an open letter published in the City press, saying that they are standing in the way of SA’s future.

The open letter follows legal action by Vodacom and MTN against the Independent Communications Authority of South Africa’s call termination regulations, 2014.

The call termination regulations, 2014 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.

Telkom CEO Sipho Maseko’s open letter to Vodacom and MTN.

Sipho Maseko, Telkom CEO.

28 February 2014
Mr Zunaid Bulbulia
MTN SA CEO
Mr Shameel Joosub
Vodacom CEO

Dear Messrs Bulbulia and Joosub

For many years we’ve been working to provide South Africans with a modern communications infrastructure. Today, we stand at a crossroads – you can hide behind regulations to protect profits, or we can all continue to expand access and lower costs.

We have been following your public statements very closely, and believe your recent actions fall short of what we can do to move the country forward. Here are some facts:

1. In 1994, mobile termination rates were introduced as a way for Telkom to subsidise MTN and Vodacom to build your networks. To achieve this, Telkom had to pay MTN and Vodacom significantly more than you paid us for the same service.
2. The extent of the Telkom subsidy to MTN and Vodacom has amounted to over R50bn, which results from the disparity between the high cost of mobile termination rates that we pay you and the low rate that you pay for the same service on our fixed-line network. You claim you will be supporting smaller players, but in reality Telkom has subsidised your business for over two decades.
3. Despite your recent claims, history has shown that lowering the mobile termination rates has not stopped your capital investment, nor your return to shareholders. In fact, in 2012 Vodacom shareholders were paid R12bn in dividends, while MTN paid almost R15bn to their shareholders.
4. Lower mobile termination rates create a more equitable playing field and – more importantly – increase access to the modern economy through expanded communications for all South Africans.

With Vodacom and MTN standing in the way of lowering mobile termination rates, I believe you are standing in the way of SA’s future.

Are your actions in the best interest of the country?
Yours faithfully,
Sipho Maseko
Telkom CEO

PS: As leaders in SA, we can advance a level playing field for all telecommunication companies in South Africa.

More on mobile termination rates

Vodacom institutes legal action against Icasa

MTN warns Icasa: scrap MTR price cuts

Did Icasa mess up?