South Africa’s part state-owned operator Telkom has subsidised bigger rivals Vodacom and MTN for over two decades, chief executive officer (CEO) Sipho Maseko said in an open letter to the operators urging them to stop opposing the lowering of mobile termination rates (MTRs).
In a letter to the CEOs of MTN and Vodacom – Zunaid Bulbulia and Shameel Joosub respectively – Maseko accused the larger operators of “standing in the way of SA’s [South Africa’s] future” by hiding “behind regulations” in order to protect profits.
HumanIPO has reported both MTN and Vodacom have launched legal actions at the High Court against the Independent Communications Authority of South Africa (ICASA) challenging the newly published regulations on MTRs, which provide for 50 per cent cuts to the rates and asymmetric pricing to the detriment of larger operators.
“For many years we’ve been working to provide South Africans with a modern communications infrastructure. Today, we stand at a crossroads – you can hide behind regulations to protect profits, or we can all continue to expand access and lower costs,” Maseko said.
“We have been following your public statements very closely, and believe your recent actions fall short of what we can do to move the country forward.”
Maseko said MTRs were first introduced in South Africa as a way for Telkom to subsidise MTN and Vodacom while they developed their networks, amounting to a subsidy by Telkom in excess of ZAR50 billion (US$4.6 billion) over two decades.
Capital investment by MTN and Vodacom will not be affected by lower rates, the CEO said, saying this has been proven by history, while shareholder returns will also not diminish.
Lowering MTRs will create a level playing field for all operators in the market and enhance access to communications for South Africans, Maseko said.
“With Vodacom and MTN standing in the way of lowering mobile termination rates, I believe you are standing in the way of SA’s future,” Maseko said.
“PS: As leaders in SA, we can advance a level playing field for all telecommunication companies in South Africa.”