MTN CEO questions link between termination rates and consumer costs

2014-03-05 15:25

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Too much has been made of the link between mobile termination rates and what consumers pay for voice and data services, MTN Group CEO Sifiso Dabengwa has said.

The link between mobile termination rates – the charge one network pays another to end a call on its network – and voice and data prices is not clear-cut, he said today after the release of the telecommunication giant’s annual results for the period ending December 31 2013.

MTN has taken legal action against telecommunications regulator the Independent Communications Authority of South Africa (Icasa) over its proposed mobile termination rates, which will cut the cost by half.

One of the contentious issues is the asymmetry introduced in the costs, which means that smaller players, such as Telkom Mobile and Cell C, will pay less than the bigger players – MTN and Vodacom.

CEO of MTN South Africa Zunaid Bulbulia said MTN’s engagement with Icasa remained constructive and that they were trying to get past the current impasse.

“We are acutely aware of public sentiment around the issue and have created a blog and have had a presence on social media to raise awareness and educate consumers about what mobile termination rates are about, and that it has everything to do with investments into the future,” said Bulbulia.

Bulbulia claims that the social media efforts have been positively received by consumers.

South Africa is not the only place where MTN is having problems with the regulator.

In Nigeria, MTN was stopped from selling SIM cards after it did not meet network key performance indicators.

Dabengwa said this was because the regulator had moved the goal posts and was not using negotiated performance indicators, but rather indicators that were “unrealistic and unobtainable”.

But Dabengwa said they were in constant communication with the Nigerian regulator.

Meanwhile, MTN has issued a summons to seek clarification on a number of issues from Turkcell, according to MTN’s general legal counsel Mike Fleischer.

Fleischer did not elaborate on the matter and said the legal process was pending.

The legal fight between MTN and Turkcell centres around a GSM licence MTN won in Iran, for which Turkcell also bid. Turkcell alleged foul play and lodged a complaint against MTN in a US court, but the case was dismissed. Turkcell has now lodged a complaint in South Africa.

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