South Africa to force cuts in mobile phone rates

South Africa’s telephone regulator said it will force mobile phone companies to cut charges for handling calls from other providers, in an attempt to lower costs for consumers and spark competition.

The Independent Communications Authority of South Africa (Icasa), said on Friday it would reduce the mobile termination rate for peak times to 73 cents per minute by March 2011, from 89 cents now.

The cost for off-peak times will be cut to 65 cents per minute, from 77 cents now.

The regulator said it aims to cut the fee for both peak and off-peak times to 40 cents by March 2013.

Icasa Councillor Thabo Makhakhe said the regulator will watch trends in the retail market closely, to “ensure that there is a fair distribution of total social welfare” between operators and consumers.

In October South Africa’s largest cellphone operator, Vodacom, warned that a dramatic reduction of cellphone charges would be disruptive to the country’s economy amd communications sector.

Vodacom and its rival MTN, which is South Africa’s No.2 biggest operator and Africa’s largest mobile operator, stand to lose billions of rand from the lower fees..

Vodacom’s interconnection revenue dropped by 3.9 percent to 8.7 billion rand in 2010, due to a 33.2 percent reduction in mobile interconect revenue in its international operations.

Shares of both Vodacom and MTN were little changed as of 0831 GMT, roughly in line with Johannesburg’s Top-40 index, which was down 0.3 percent.
Source: Reuters