South Africa to Reconsider Mobile-Fee Cut Targeting MTN, Vodacom

South Africa’s communications regulator will review a January order to cut the fees mobile carriers collect from rivals to access their networks following complaints from Vodacom Group Ltd. (VOD) and MTN (MTN) Group Ltd.

The Independent Communications Authority of South Africa “has decided to engage in a reconsideration of the termination rates applicable for the years beginning 1 April 2015 and 1 April 2016,” it said in a March 12 response to objections by the country’s two largest carriers, a copy of which was seen by Bloomberg News. The review will take six months, it said.

The regulator ordered to lower mobile termination rates by 50 percent to 20 cents ($0.02) per minute from April 1, with further cuts to 15 cents starting April 2015 and 10 cents a year later. The reductions are intended to help smaller carriers including closely held Cell C Pty Ltd. and Telkom SA SOC Ltd. (TKG), the fixed-line phone company that’s 40 percent controlled by South Africa’s government.

In an e-mailed statement, ICASA confirmed the affidavit and its content, adding that the review is being done with the help of an external economist.

“The matter is going to court next week and all clarification will be made then,” it said.

Jobs Threatened

Lower revenue from mobile termination would mean MTN and Vodacom receiving less from smaller competitors, putting pressure on the companies to cut costs. Vodacom’s mobile interconnection revenue decreased 24 percent to 1.9 billion rand ($173 million) in the six months through September, while MTN’s fell by 25 percent in South Africa.

Vodacom, a unit of Vodafone Group Plc (VOD), joined MTN, Africa’s largest wireless operator, in taking legal action against the regulator over how it put together the plans to reduce termination rates. The phone companies, both based in Johannesburg, control about 80 percent of the market, according to BPI Capital Africa analyst Kate Turner-Smith.

A Vodacom official declined to comment on the legal process. An MTN representative wasn’t immediately available for comment.

To contact the reporter on this story: Christopher Spillane in Johannesburg at cspillane3@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net Nick Leiber

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