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VENTURES AFRICA – MTN will take a legal action against the Independent Communications Authority of South Africa (ICASA) over the announcement it made last month to reduce mobile termination rates (MTR) for telecom operators.
The mobile termination rates – rates telecom operators charge themselves for processing a call or text on each other’s network – were cut by 50 percent by the telecoms regulator, effective March 1st 2014 with a plan of continuous annual cuts for the next three years
MTN as however asked that the policy be reversed but ICASA is adamant on its decision forcing the telecoms company to take a legal route.
“MTN has exhausted all avenues of engagement with the regulator on this matter and is left with no alternative but to pursue its legal options,” Zunaid Bulbulia, Head of MTN’s South African unit, said in a statement.
Vodacom, MTN’s largest rival has also stated its intention to pursue a legal course of action against the regulatory body, stating that the cuts will cost the company R1 billion ($90 million)
Nomvuyiso Batyi, ICASA’s councillor for Markets and Competition told reporters that the body has not been served with any legal letter by Vodacom, just MTN.
“Vodacom has not served us with anything. The legal letter was from MTN. They are saying we must withdraw the regulations but we are defending that action.”
The decision to take a legal action by the big operators (Vodacom and MTN) is however not farfetched since they will pay 44 cents per minute to small operators like Cell C and Telkom Mobile who are just experiencing a cut of 20 cents from the initial 40 cents per minute.
This might affect the position of the market leaders who are paying a higher amount to smaller operators since the MTR constitutes part of their operating costs.
Conversely, smaller operators will have the opportunity to compete favourably for market share since they will pay less.