MTN drops call rate, takes fight to Cell C

2014-04-14 11:00
(Duncan Alfreds, News24)

(Duncan Alfreds, News24)

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Cape Town - Spending in SA on voice calls may be on the decline, and a legal case looms over termination rates, but that hasn't caused any let-up in the competition between mobile operators.

MTN announced on Monday that it had dropped its voice call rate to 79c per minute in a direct shot at Cell C which has long advertised its 99c per minute call rate.

The move should be seen in the context of an increasingly competitive South African mobile market and public relations nightmare.

Regulator Icasa or the Independent Communications Authority of South Africa announced recently that MTRs in SA would be reduced to allow for more competition in the country.

However, the regular decided that it would implement asymmetrical reductions on MTRs or the rate that mobile operators pay each other for calls that terminate on rival networks.

Legal proceedings

It was proposed that MTRs favoured junior operators Cell C and Telkom Mobile, but MTN and Vodacom began legal proceedings, causing Icasa to backtrack.

Cell C created a damaging ad campaign which accused MTN of being greedy. That campaign eventually had be withdrawn after a complaint from MTN.

"It's a very sad day for this country. MTRs have been around since we started... For the first time government has really gone out there with the regulator and said: 'Let's create a framework that allows fair competition,'" Cell C acting CEO Jose Dos Santos told News24 about MTN's legal challenge.

Termination rates make up a significant portion of the pricing structure and form part of an operator's revenue, but the perception that consumers are being unfairly charged has hurt the image of mobile operators.

"Consumers will maintain that they have been ripped off for far too long in this environment, and the public outcry in reaction to MTN's court action will be largely negative for the networks," said Steven Ambrose, CEO of Strategy Worx.

According to the Mobility 2014 research study, conducted by World Wide Worx with the backing of First National Bank, people in the 19 - 24 age group are abandoning spending on voice calls in favour of data.

The results show that voice declined to 56% of the group's cellphone expense, down around 10% from 2012, while spending on data increased from 17% to 24%.


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Read more on:    mtn  |  cell c  |  icasa  |  mobile
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