Policy Brief 2: South Africa, 2012
South Africa’s (SA’s) mobile termination rate (MTR) reductions of March 2011 and March 2012 have not, contrary to the claims made by operators, hurt the industry or led to higher retail prices, lower investments or retrenchments. While end-user prepaid mobile telephony prices have come down to some extent, the prices are still high, and SA’s MTRs are still far above the cost of an efficient operator. The regulator’s (ICASA’s) glide path is too slow and will not take the MTRs down to the cost of an efficient operator. As a consequence, South Africa continues to be among the most expensive countries in Africa for prepaid mobile usage. Fair competition is needed in order to ensure a decrease in mobile tariffs, and above-cost MTRs are one of the main obstacles to fair competition.
1. Retail price cuts. Retail prepaid mobile telephony prices have started to drop, but only since the second MTR reduction, which moved the MTR closer to the cost of an efficient operator and allowed smaller players to reduce their off-net prices.
2. SA still expensive. Prepaid mobile prices remain high. South Africa’s mobile affordability is ranked 33rd out of 44 African coun-tries surveyed for cheapest price available from dominant operators. SA’s dominant players are still able to retain customers with low on-net and high off-net prices.
3. Cell C lowers off-net prices. Cell C dropped its off-net rates to R0.99 per minute to match its on-net price, a move only possible after the second MTR reduction (and which was briefly matched by Vodacom).
4. 8ta doubles up airtime. 8ta increased its nominal tariffs in September 2012 but offered double-value on airtime recharges, improving SA’s affordability ranking to 19th out of 44 in terms of cheapest product in the country.
5. Telkom biggest winner. Telkom’s annual net termination payment (termination revenue minus termination expenses) was R1.9billion less in the 2011-12 financial year than in 2010-11, contradicting its complaints about the impact of MTR cuts on its bottom line.
6. Vodacom a net beneficiary. Vodacom netted R66million more from call termination in 2011-12 than in the previous year, despite claiming, when the MTR cuts were announced, that it would suffer a R500million net loss.
|South Africa’s mobile termination rate debate: What the evidence tells us
|Cost of communications in SA
Stork, C., & Gillwald, A. (2012). South Africa’s mobile termination rate debate: What the evidence tells us (Policy Brief No. 2; South Africa). Research ICT Africa. https://researchictafrica.net/publications/Country_Specific_Policy_Briefs/South_Africa_Mobile_Termination_Rate_Debate_-_What_the_Evidence_Tells_Us.pdf