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Cell C says MTN's afraid of competition [Bizcommunity (South Africa)]
[February 14, 2014]

Cell C says MTN's afraid of competition [Bizcommunity (South Africa)]

(Bizcommunity (South Africa) Via Acquire Media NewsEdge) Mobile network operator Cell C's acting chief executive‚ Jose dos Santos said rival MTN's court action to stop the communications regulator from implementing new rates was an attempt to avoid losing customers.

Dos Santos pointed out in its founding affidavit filed that MTN had said it believed the new pricing structure would be irreversible once implemented‚ and would change the structure of the market. "It means they will lose customers‚" he said.

"What MTN is really afraid of is real competition in the market‚ which is good for the consumer and brings prices down. This is the first time the government and the regulator are working to benefit the consumer‚" he said.

The Independent Communications Authority of SA (Icasa) last month halved termination rates - the fees that cellphone companies charge rivals to use their networks - as part of a broader plan to reduce the cost of communication in South Africa‚ which is regarded as among the highest in Africa.

From next month‚ mobile termination rates will fall to 20c per minute from 40c per minute‚ and gradually decline over the next three years to 10c per minute.

MTN and Vodacom will‚ however‚ pay their smaller rivals‚ such as Cell C and Telkom Mobile‚ more than double the normal rate‚ according to the new asymmetric termination rate.'Offending provisions' Cell C and Telkom have announced they would use the new asymmetric regime to reduce their retail pricing.

High termination rates are seen as keeping small and new entrants from competing on price. They have fewer customers‚ and most of their customers' calls are made to other networks‚ which results in their paying more in termination fees to bigger operators.

MTN and Vodacom oppose the new rates.

The regulator confirmed in Parliament that it had received a letter from lawyers acting for MTN stating that "offending provisions" contained in the regulations must be removed as a matter of "urgency".

MTN is seeking a court interdict to stop Icasa from implementing the new tariff structure. The hearing is set down for 24 February.

An Icasa councillor who deals with markets and competition‚ Nomvuyiso Batyi‚ said the regulator had instructed its lawyers to write back to MTN's legal team to make it clear that these provisions would not be removed.

Vodacom indicated in its recent results that it would take legal action. However‚ a spokesman said: "We have not initiated any legal action." Batyi told MPs that Icasa's regulations on the termination rates would stand‚ unless a court referred them back. She said a legal battle was expected and Icasa had already hired a senior counsel to represent it.

She said the challenge was likely to be about the procedures followed leading up to the implementation of the regulations.

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