Based on current industry conditions, the Southern African communications sector regulator has decided to lower termination rates over the next five years.
The Independent Communications Authority of South Africa (ICASA) is the regulator for the South African communications sector.
“It’ll have a benefit for any small player in the market. It will certainly put them in a much better position to compete on a sustainable basis,” Cell C CEO Alan Knott-Craig told CNBC Africa on Monday.
“The regulations from ICASA were certainly aggressive but I think they were long overdue, so they had to be aggressive now. This time they’ve been very efficient and very constructive and they’ve done the job quickly.”
Knott-Craig however added that the asymmetry rates proposed were a lot lower than hoped for, but that they would help give smaller companies more market share.
“We would’ve liked a bit more, but the whole way that ICASA published the regulations are good. Whilst we might want to criticise, the fact of the matter is its pretty good regulation,” said Knott-Craig.
Cell C’s Saudi parent, Oger Telecom, has also acknowledged the termination rates reduction move, which Knott-Craig explained would make a significant difference in terms of investor confidence.
Earlier this year, Oger Telecom announced that it would provide Cell C with a 3.5 billion rand equity investment. The funding is yet to be released to Cell C, and was subject to first seeing ICASA’s future plans for the industry.
“The only way you’re ever going to get prices down is through competitors trying to get market share, because the only way they can get market share is through price,” said Knott-Craig.
“What the regulations from ICASA mean is that they can continue to [reduce rates] on a sustainable basis. As they keep taking market share away from MTN and Vodacom, there will be a point, and I think we’ve already seen that, that Vodacom and MTN react and bring their own prices down.”