By Wendell Roelf
CAPE TOWN Feb 11 MTN Group will begin
a legal battle with South Africa's telecoms regulator over
planned rate cuts, the company said on Tuesday, just days after
its main rival announced a similar plan to fight the regulator.
Last week, Vodacom Group, the South African unit of
Vodafone Plc, said it would mount a legal challenge to
the cuts, which it said might cost it as much as $90 million in
the coming year.
The Independent Communications Authority of South Africa
(ICASA) said last month that it would halve the rate a company
can charge rivals for using its mobile network to 20 South
African cents per minute per call starting March 1. The rate
will be reduced another 10 cents by March 2016.
Pretoria says it wants to cut the so-called "mobile
termination rates" to improve competition.
But the big operators - who have invested the most in their
networks - say it will hurt their businesses and benefit smaller
rivals such as Telkom SA. Vodacom has also said the
regulator did not follow due process in reaching its decision.
"MTN has exhausted all avenues of engagement with the
regulator on this matter and is left with no alternative but to
pursue its legal options," Zunaid Bulbulia, the head of MTN's
South African unit, said in a statement.
Although dwarfed on the rest of the African continent by
MTN, Vodacom is the dominant player in South Africa, meaning it
is likely to be the hardest hit by the cuts.
"We are confident in the procedure that we followed. Since
2007 we followed the same procedure. We don't know why there is
a problem at this point," Nomvuyiso Batyi, a councillor at
ICASA, told reporters after briefing parliament.
Pretoria has also said the cuts are necessary to lure more
"The high cost of communication has deterred foreign
investment and local domestic investment, and our view is that
these rates provide for greater competition," Communications
Minister Yunus Carrim said.
Shares of MTN closed down 0.5 percent. Vodacom edged up 0.7