Comments on: Nhleko warns against drastic intervention on interconnect

By: William Stucke

William Stucke — Mon, 31 Aug 2009 21:36:26 +0000

This is wrong in so many places – where do I start?
“For instance, most of our capital expenditure is in dollars so the value of the rand has an impact.” The Rand has appreciated from R10/$1 to R8/$1 this year. Your point is?

“Also, the cost of your network varies depending on if you are in a country with a large population and very high population density or covering wider areas with a sparser population,” Sure, and SA has a 25% higher population density than the USA, for example. SA has a population density of 39/km2, Namibia has 2.5/km2. Your point is?

The capital cost per GSM user is $300, and per fixed line user it’s $1000. No arguments about how much it costs to roll out a GSM network as justification for high prices hold water.

“You have a high concentration of people in Windhoek, and a high concentration of people in Walvis Bay and Swakopmund.” And we don’t have a high concentration of people in Johannesburg, Cape Town and Pretoria?

Ivo has correctly pointed out why we have high interconnection rates. The reality is that if they were dropped substantially, Telkom and Cell C would pay MTN less, and MTN would pay Vodacom less.

If ICASA were to mandate a reduction in interconnect rates to R0.25/minute peak+VAT, whether immediately or phased over time, I wouldn’t expect an immediate drop in prices from MTN and Vodacom. However, I would expect the smaller, more agile, companies to be able to offer competitive options, which at present is impossible. They would gain market share, which with time will force down prices for all.

MTN and Vodacom shareholders would get a lower dividend. Shame.

By: Clear Thought

Clear Thought — Mon, 31 Aug 2009 20:34:56 +0000

Does anybody take this guy seriously? What a biased perspective. However, it is true to say that the telcos need to earn a return on their capital. However, they can do that by raising prices, but in a manner than doesn’t stifle competition by shafting new players. Then, allow stronger competition to give consumers a better deal.

By: Peter

Peter — Mon, 31 Aug 2009 19:27:39 +0000

As an MTN shareholder I am disappointed (to say the least) that MTN is refusing to admit that “inter-connect fees” are ridiculously high in South Africa. My only consolation is that Vodacom is being just as obtuse.

By: Ivo Vegter

Ivo Vegter — Mon, 31 Aug 2009 17:32:27 +0000

Waffle waffle rubbish lies.

Or rather, in 1999, interconnect between Vodacom and MTN was 20c. In 2001, it was R1.23. The regulator was informed by means of a joint filing by both MTN and Vodacom. What happened between 1999 and 2001? What changed so dramatically? Let’s think. The rand? Nope, didn’t collapse against the dollar. Population density? Nope, it increased somewhat. Network investment? Nope, it was pretty steady. What then could it be that made such a sudden six-fold increase in the interconnect rate necessary? Could it be the licencing of Cell C? Surely not. Surely MTN and Vodacom aren’t both liars who colluded to force the new competitor out of the market?