MTN, Vodacom Told to Say How Profit Cut by New Rates

South Africa’s communications regulator said the country’s largest wireless operators, Vodacom Group Ltd. and MTN Group Ltd., should say how their profit would be reduced by plans to cut mobile termination rates.

“They can’t tell you how their profits will be affected,” David Unterhalter, senior counsel for the Independent Communications Authority of South Africa, told the South Gauteng Court in Johannesburg today. “MTN and Vodacom have done a delicate tap dance. If you were apprehensive that these rates were going to be below your costs, why didn’t you show us?”

Icasa said in January it would halve the amount mobile-phone companies pay each other to access other networks this year, with further cuts to come in 2015 and 2016. MTN and Vodacom, which stand to receive lower fees from smaller competitors including Cell C Pty Ltd., have started legal action over how the regulator arrived at its conclusions.

Vodacom Chief Executive Officer Shameel Joosub told investors on Feb. 5 the company may lose as much as 1 billion rand ($93.7 million) if the new mobile termination rates remain in place. Johannesburg-based Vodacom and MTN weren’t immediately available for comment today.

Icasa Advocate Gilbert Marcus said the regulator would review proposals for mobile termination rates in 2015 and 2016, while this year’s 50 percent reduction to 20 cents a minute would be implemented as planned from April 1. Vodacom and MTN say they support a reduction in rates after a more transparent process.

(Corrects currency conversion in fourth paragraph.)
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