S. Africa's Vodacom takes legal action over rate cuts

JOHANNESBURG Thu Feb 27, 2014 5:39am EST

JOHANNESBURG Feb 27 (Reuters) - South African mobile operator Vodacom said it has asked a Johannesburg court to stop the industry regulator halving fees operators charge competitors to carry calls on their networks.

The move is expected to hurt earnings at Vodacom and bigger rival MTN, which has also asked a court to review the decisions by the Independent Communications Authority of South Africa (ICASA)..

ICASA has told operators to cut their fees by the start of April.

"Legal action should always be a last resort and we're not happy that we've reached this situation," Vodacom Chief Executive Shameel Joosub said in a statement on Thursday.

Vodacom said it filed its petition on Tuesday asking the court to review the legality of ICASA's process.

Smaller players Telkom SA and unlisted Cell C, which is controlled by Dubai-based Oger Telecom, have welcomed the cuts, saying they pay far too much to the industry giants as most of the calls are inevitably carried by either Vodacom or MTN.

Vodacom's Joosub said ICASA had not carried out a detailed study to determine the cost receiving networks bear to carry calls, as required by South African law.

Vodacom said it has invested some 30 billion rand ($2.8 billion) in infrastructure over the past six years, enabling it to carry more traffic at cheaper rates. Smaller rivals had not made similar investment, making them uncompetitive, it said.

($1 = 10.8150 South African rand) (Reporting by Helen Nyambura-Mwaura; Editing by Ed Stoddard and Erica Billingham)

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