ICASA's move could cost MTN millions - CNBC Africa

ICASA's move could cost MTN millions

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MTN stands to lose 450 million rand in revenue should ICASA implement its 2014 mobile termination rates. PHOTO: ABN Graphics

On Tuesday, both Vodacom and MTN presented their arguments in a joint case against the Independent Communications Authority of South Africa (ICASA) in which they filed an urgent interdict seeking to prevent the regulator from implementing the new mobile termination rates, the fee that mobile operators pay to carry each other’s calls. 

The matter is being heard in the South Gauteng High Court where Senior Counsel Advocate Alfred Cockrell argued that MTN would make revenue losses amounting to 450 million rand in six months if the new proposed termination rates are to be implemented on 1 April.

“It's not a question of profit or loss but whether or not my client will suffer irreparable harm and the answer to that is yes," said Cockrell. 

The asymmetrical rates review sees big players MTN and Vodacom pay 44 cents per minute to connect to Cell C and Telkom Mobile, while the smaller players pay 20 cents per minute more than half. ICASA says the review is aimed at sharing the profits and affording smaller players an opportunity to take part in the sector's infrastructure development. 

The networks argue that ICASA has acted, "unlawfully in its discriminating against the bigger players in the interconnect market or wholesale market", said Wim Trengrove, Senior Counsel for MTN. 

The court heard that while discriminatory practice is acceptable in the retail market, as an attempt to create a pro-competitive environment, the same was not applicable in the wholesale or interconnect market. 

MTN's legal counsel put it to Judge Haseena Mayat that asymmetry may only be used in the interconnect market when a new competitor entered the industry, and that it could only be implemented for a period of three to four years. At least one of the beneficients of the new rates, Cell C, is a decade old.

"MTN and Vodacom customers will have to pay for the subsidy granted to Cell C and Telkom Mobile," said Trengrove. 

The networks questioned the model and data that was used by the regulator to determine the 2014 rates. 

Vodacom Senior Counsel Fanie Cilliers also argued that ICASA, by its own admission, failed to defend their determination of the cost base price of 10cents per minute, a figure both networks say was ‘thumb sucked’ by the regulator. 

The court will hear from ICASA on Wednesday, it's expected that the regulator will argue that it acted in the interest of the public. 

The matter has been set down for two days ending Wednesday, Judge Mayat may reveal her findings on Friday.

By:Christine Mhundwa 

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