Business

MTN, Vodacom agree to lower rates

26 October 2009

South African mobile telecoms firms MTN and Vodacom have agreed to lower their mobile termination rates, MTN announced on Friday.

"MTN SA can confirm that an agreement has been reached with Vodacom, and is pursuing bilateral negotiations with Cell C and other operators," the company said in a statement.

The two parties reached an agreement based on the parameters set in earlier negotiations, which have been under way for some time.

"However, it is with regret that no agreement has been reached with Cell C at this stage," MTN said

The announcement comes in the wake of public hearings held by Parliament's communications committee, when MPs and others urged South Africa's mobile networks to cut their mobile termination rates, which currently stand at R1.25, to help make communications more affordable.

Mobile termination rates are the fees that a network charges another network for receiving calls on its network.

MTN SA said the negotiations took place in terms of regulations published by the Independent Communications Authority of South Africa (Icasa), which has oversight over the process.

In terms of the agreement, MTN and Vodacom proposed an immediate reduction of approximately 19% of the blended wholesale interconnect tariffs, with further reductions year-on-year for the following three years.

This reduction cycle would enable MTN to make the necessary changes to its operations and long-term commitments to reflect the decrease in interconnect rates, the company said.

In terms of due process, the two parties would now need to lodge the agreement with Icasa for their regulatory oversight.

"MTN SA is pleased that progress has been made in the negotiations, and will continue to engage in good faith with other parties as part of the Icasa process to resolve outstanding interconnect agreements," the company said.

Sapa