File picture: Siphiwe Sibeko

Johannesburg - An application in the South Gauteng High Court by MTN to suspend the bulk of the new call termination regulations could delay the implementation of lower rates, which are intended to reduce the cost to communicate, for as long as two years, an industry expert has said.

The order could strain the relationship between MTN and larger local cellular network operator Vodacom, and the Independent Communications Authority of SA (Icasa) and the government by extension, to unprecedented levels, Steven Ambrose, the chief executive of Strategy Worx, said on Friday.

He said the ramifications of the legal action included a delay of up to two years before new call termination rates could be introduced. He added that it could have implications for the next four years for the industry. Call termination regulations are reviewed every three years.

“This takes the relationship between the networks and Icasa to a new place. Instead of being co-operative, it is combative.”

MTN filed papers on February 12. It objected to the new call termination rates, which Icasa introduced on January 29. Icasa awarded a significant and unprecedented asymmetry to two smaller operators, Cell C and Telkom Mobile. It proposed an asymmetry rate of 40c last year, which it revised to 44c last month, compared with the 20c allowed for MTN and Vodacom.

MTN has requested Icasa review and set aside the regulations gazetted on February 4.

“The net result of this would be a net cash flow effect of R1 billion in the initial year of the new termination regime from the larger networks to the smaller ones. This is an amount too significant for larger networks to ignore,” Ambrose said.

He added that consumers could not benefit in the short term from the new rates but the competitive landscape would change over the next few years.

The new rates would have been implemented on March 1 but Icasa would argue for a postponement of the commencement date to May 1, the regulator said on Friday.

Earlier this month, Vodacom indicated it was reviewing its options for recourse. It will be a net payer for outbound calls from its network to other networks.

Icasa and 30 other respondents including Vodacom, Cell C, Telkom and Neotel, have until tomorrow to respond to MTN’s nearly 400-page application, which was scheduled to be heard on February 25, but Icasa spokesman Paseka Maleka said the authority would request a later date.

“Icasa has decided that it is in the public interest for the urgent application to be heard and decided on a less urgent basis. The high court’s decision will have wide ranging effects on the parties and the public at large, including subscribers for telecommunications services.”

MTN chief executive Zunaid Bulbulia said: “MTN’s decision to take the legal route should not be construed as an attempt to keep telecommunications costs high, as has been inferred in certain quarters.”

He added that Icasa had not followed a fair process nor appropriate costing to ensure that the new rates did reflect the costs that were incurred by all the players in the industry.

“There is a common goal in the industry to reduce costs and to promote fair competition. MTN believes that the review proceedings which it has brought will ultimately assist Icasa and all the other roleplayers in realising that goal in a proper and commercially sustainable way,” he said.

Jose dos Santos, Cell C’s acting chief executive, confirmed yesterday that Cell C intended to challenge MTN’s application.

“Cell C and Telkom Mobile were to reduce their retail prices during the period before the review is determined. It would cause a permanent change to the market that would be irreversible even if the review were to succeed. Only the grant of interim relief could prevent this change to the market structure from occurring before the review is determined.”

Telecoms stocks lifted on the JSE on Friday afternoon after Icasa said it had cancelled hearings into local loop unbundling, a regulatory intervention that will give Telkom’s competitors access to its infrastructure. Icasa has previously mooted unbundling of cellphone network infrastructure to facilitate competition. It will host an information workshop tomorrow and review the hearings at a later date.

On Friday, MTN gained R1.18 to close at R194. Vodacom rose 53c to close at R118.16 and Telkom surged 1.29 percent to end the session at R29.85. - Business Report