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MTN: Call rate drop not likely

The mobile giant says there’s no proof that Icasa’s move to cut MTRs will help consumers.

MTN says there’s no proof that Icasa’s move to cut certain cellular rates will help consumers. Picture: defenceweb.

JOHANNESBURG - Mobile giant MTN on Monday said it's not likely the company will cut call rates at midnight.

This despite the Independent Communications Authority of South Africa (Icasa) being given the go-ahead to enforce new regulations for the next six months.

Earlier on Monday, the South Gauteng High Court in Johannesburg ruled Icasa's decision to cut mobile termination rates (MTRs) for smaller operators such as Telkom Mobile and Cell C was unlawful and invalid, but also chose not to halt the process.

Judge Haseen Mayat ordered the cuts could go ahead as planned, but that Icasa would have to go back to the drawing board within the next six months to justify the continuation of the regulations.

MTRs are the fees operators charge competitors to carry calls on their networks.

From midnight, smaller operators will only have to pay 20 cents per minute when users call larger networks.

MTN and Vodacom will continue paying 44 cents per minute to smaller operators.

If smaller operators cut rates, it could attract more customers, which would impact both MTN and Vodacom.

Both companies took the regulator to court last week.

MTN General Manager of Regulatory Affairs Graham de Vries welcomed the ruling.

"Obviously, MTN is pleased with the judgment in the high court today," he says, adding that the company is particularly happy with the judge's statement that the specific figures settled on by Icasa were "completely arbitrary".

De Vries says the company is confident Icasa will take a new direction over the six-month review period.

"We anticipate that Icasa will have to redo the findings and redo the cost calculations. We will participate [in the process] with Icasa and see where we go."

De Vries argues there is no proof that cutting MTRs could help consumers.

"I don't think [call rates] will drop at midnight tonight. We will have to wait and see what our competitors also do. But it's a very difficult thing when retail rates are not intrinsically linked to wholesale intervention."

Icasa and Cell C also praised Monday's ruling.

In a statement released earlier, Cell C acting CEO Jose dos Santos said the decision to allow implementation of cuts for at least the next six month was "a step in the right direction".

He said it was a positive outcome for consumers and the overall economy.

Dos Santos hit out at Vodacom and MTN for managing to "frustrate" Icasa's process, saying their actions make it difficult for smaller operators to establish their business plans beyond October.

"It also negatively impacts on the smaller operators' ability to bring down prices to ensure all South Africans have access to affordable communications," he said.

Cell C says it will continue working with Icasa to achieve lower rates for all consumers.