South Africa Communiqué
29 June 2010
Mobile network operators’ rejects unbudgeted proposed cut

Mobile network operator Vodacom has expressed disappointments to the Independent Communications Authority of South Africa (Icasa) after it proposed another round of rate cut into the interconnection fee. Vodacom pleaded with the regulator to delay the second round of interconnection rate cuts, arguing should the new rate be introduced in July it would “devastate” the industry.

Vodacom says at least R600m was wiped off its bottom line since the 89c rate came into effect three months ago and warned of possible job losses if the 65c fee is introduced this financial year. In April Icasa proposed an interconnection rate, the fee network operators charge each other to carry calls on to their network of 65c a minute in peak and off-peak periods from July 1. This was to be followed by 50c in July 2011 and 40c 2012, in a process called a “glide path”.

That announcement came a month after the three (3) network operators -  Mobile Telephone Network (MTN), Vodacom and Cell C cut rate from R1,25 to 89c, instead of the government’s required 60c, after a compromise agreement with Communications minister Siphiwe Nyanda

Howard Sackstein, of Saicom Voices Services (SVS) said at Icasa’s hearing on June 28 the March 2010 reduction had not filtered through to retail prices, he urged Icasa to regulate retail prices. Adding “consumers are worse off now than they were before March 2010. This is shocking, given what the regulations were meant to achieve. Mr. Shameel Joosub, MD of Vodacom South Africa, argued at the hearing that they are not against Icasa’s proposed glide path, just the timing of its implementation. Vodacom proposed it should start next year and end in 2013. It proposed a peak interconnection rate of 81c in March 2011, followed by 63c in  2012, and 50c in 2013.

Vodacom has threatened court action against Icasa if it did not follow the correct process in regulating interconnection rates, as stipulated in the Electronic Communications Act (ECA). MTN is expected to take similar action, in its written comment on draft regulations, it said two steep, unbudgeted cuts in a single financial year would force “dramatic cost cutting” in its second half.


Meanwhile, the selection of a Head of News at SABC will go ahead as planned with the interview panel resuming its assessment of four candidates for the position.

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