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 firstname.lastname@example.org.
To contact the editor responsible for this story: Peter Hirschberg in Jerusalem at email@example.com.