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South Africa connection charges could trigger job cuts -Telkom CEO
* New lower rates seen hitting mobile firm profits
* Regulator says rates reduced to lower cost to communicate
By Nqobile Dludla
JOHANNESBURG, Aug 27 (Reuters) - South Africa's plan to
slash the fees mobile firms charge each other to terminate calls
on their networks proposed by the regulator could hurt revenue
and lead to job cuts, the fixed line and mobile operator Telkom
said on Monday.
The Independent Communications Authority of South Africa
(ICASA) on Aug. 16 published draft rules on mobile termination
rates (MTRs) and fixed line termination rates, the prices
telecoms operators charge for connecting calls made from other
networks, in a move that could hit profits for operators.
The regulator in 2014 implemented a three-year "glide path",
the timetable for bringing down the rates gradually for telecoms
companies, including Telkom, Vodacom and MTN,
saying they were too high and hindered competition.
The new proposal by ICASA will see charges for terminating a
call on mobile and fixed lines slide to 9 cents per minute from
12 cents for mobile operators and 3 cents per minute from 8
cents for fixed-lines over a three-year period.
The move will also reduce MTR asymmetry, where smaller
mobile players such as Telkom currently charge higher fees to
spur competition in a market controlled by Vodacom and MTN.
Telkom Group Chief Executive Sipho Maseko said his firm will
be paid at lower rates by Vodacom and MTN, while it pays higher
rates to the bigger players.
Maseko said Telkom would be forced to review its investment
decisions and which regions of the country it participates in.
"The proposed fixed termination rates require cost
reductions that are not feasible within a three-year time frame
without significant job losses," Maseko told reporters.
"As termination rates trend down, it puts a lot of pressure
on your ability to provide the service and recover the cost in a
sustainable way ... how can we be able to operate profitably."
Operators will be allowed to send in their written comments
to the regulator by Sept. 7. The rules are set to take effect at
the start of October.
He said one of his proposals will be to have Vodacom and MTN
pay higher rates to connect callers from their networks to
subscribers on Telkom and smaller mobile provider Cell C.
Africa's most industrialised economy has in the past said it
aims to double its mobile broadband coverage to 80 percent of
the population by 2019.
(Editing by James Macharia and David Evans)
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