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Oct
30

SOUTH AFRICAN REGULATOR CUTS CELLPHONE RATES

Bloomberg Business Weekly

South African Regulator Cuts MTN, Vodacom Rates
October 29, 2010, 7:57 AM EDT

By Franz Wild
Oct. 29 (Bloomberg) — MTN Group Ltd. and Vodacom Group Ltd.’s call termination rates were set at 0.73 cents ($0.10) from March following South African government demands to bring down the world’s third-highest interconnection rates.

Peak call rates for the two companies were set at 56 cents from March 2012 to February 2013 and will drop to 40 cents after that, the Independent Communications Authority of South Africa, the industry regulator, said in an e-mailed statement from Johannesburg today.

“It is a well-known reality that South African citizens are concerned about the amount of money they spend every month on the basic necessity of electronic communications,” Icasa councilor Thabo Makhakhe said in the statement.

Vodacom, the biggest provider of mobile-phone services to South Africans, said the decision will likely boost competition and lead to lower call charges.

“The agreed glide path gives us time to adjust our business model in order to accommodate the significant further revenue reduction that will result from the changes,” the company said in an e-mailed statement.

Vodacom lost 0.1 percent to 66.75 rand [of its share value]at 1:40 p.m. in Johannesburg trading, while Telkom South Africa Ltd., Africa’s largest fixed-line operator, declined 0.3 percent to 35.99 rand. MTN gained 0.7 percent to 124.86 rand.

Minister of Communications Siphiwe Nyanda ordered Icasa a year ago to implement a directive for operators to cut rates to levels that reflect costs associated with carrying each other’s calls.

To contact the reporter on this story: Franz Wild in Johannesburg at fwild@bloomberg.net.

To contact the editor responsible for this story: Peter Hirschberg in Jerusalem at phirschberg@bloomberg.net.

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3 comments

  1. admin says:

    CAMERON DUODU writes:
    The South African Government is to be congratulated on its bold decision to protect the populace against the high cost of communications in the country. Other African countries should summon enough courage to follow suit. This is because the capital outlay in the communications industry is normally so high that if left to themselves, the companies — and they are usually very few — can reach informal agreements between themselves that obviate the normal price reductions that come with “competition”.

    There really isn’t much competition, in fact, because the Government selects the companies to which it gives licences to operate. If there were real competition, the Government would invite all-comers and set high enough taxes to drive out those unable to compete!

    In Ghana, the situation is made worse by the fact that the companies do not only charge high rates but also, carry out practices that compel affluent citizens to acquire several cellphones, just to be able to make calls. Incredibly, calls made from a number on one network to another on a different network are often BOT connected. Instead, one hears a mendacious message to the effect that “the number you are calling is either switched off or out of range”! You will laugh your head off . If you have two phones from different networks lying side by side and you use one to call the other and you are told that the number you are calling is either switched off or out of range.

    If Ghana’s regulatory authority were up to scratch, it would have detected this dodge and imposed heavy fine on companies that lie o the populace in this way. Self-regulation does not work: the companies were carrying pout such squabbling in Nigeria until the Government put its foot down. Now I can testify that the practice has practically ended. I was recently in Abuja and never encountered this nonsense that was the bane of the Nigerian communications industry some years ago.

    In

  2. George says:

    Less money spent on cell phones means more money on other vital household expenditures. So your point has wider implications than meets the eye.

    But there are other and similar areas of concerns – high costs of air travel to Africa, high costs of phoning Africa etc etc

    When you make these communication opprtunities costly, you isolate the continent, stifle internal communications, you compromise the engine of democracy, .

    There is a simple solution, really! African Governments should encourage consumer activism and then rely on the public activism to provide a level playing field.

    George

  3. Michel says:

    How can the government encourage true competition and consumer activism when they are in the pockets of these operators who just simply do what they want when they want and to whom they want without impunity !

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