Thursday, 17 September 2009

Lower interconnect rates would assist MVNOs – South Africa

Virgin Mobile South Africa, which still refuses to provide statistical data about the performance of their African MVNO, has commented positively regarding the Portfolio Committee on Communications move to lower interconnect rates between operators within the country. It is expected that the committee will force a reduction in interconnection rates from 1st November 2009 to 60 cents per minute for peak rate calls. Further annual reduction will also be applied of 15 cents per minute until 2012, by which point the rate will have fallen to 15 cents per minute.

While the move will hit the profits of the biggest operators the most, Virgin Mobile, which is believed to have a minority 4th place market share, positively commented on the move. Virgin Mobile’s Chief Executive Officer, Steve Bailey, reportedly noted: “I am very pleased about [the] Government’s initiative to lower interconnect rates”. He went on to say that the high rates have been a market barrier to full competition and for new entrants to the telecoms market in South Africa and that the rates had a negative effect on Virgin’s own market entry.

Cell C’s Executive Head of Regulatory Affairs, Nadia Bulbulia, Virgin Mobile’s host network, also cheered the move noting that MTN and Vodacom had increased the interconnect rate by 500% just prior to Cell C’s launch.