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Johannesburg - The Independent Communications Authority of South Africa (Icasa) said it will force mobile phone companies to cut charges for handling calls from other providers, in an attempt to lower costs for consumers and spark competition.
Icasa said on Friday it would reduce the mobile termination rate for peak times to 73 cents per minute by March 2011, from 89 cents now.
The cost for off-peak times will be cut to 65 cents per minute, from 77 cents now.
The regulator said it aims to cut the fee for both peak and off-peak times to 40 cents by March 2013.
Icasa Councillor Thabo Makhakhe said the regulator will watch trends in the retail market closely, to "ensure that there is a fair distribution of total social welfare" between operators and consumers.
In October, Vodacom Group [JSE:VOD] warned that a dramatic reduction of cellphone charges would be disruptive to the country's economy amd communications sector.
The JSE-listed Huge Group said "Substantial benefits" will arise from the decision on mobile termination rates [call costs] by the Icasa.
The company's subsidiary, Huge Telecom, is a significant wholesale client of the mobile network operators, supplying mobile voice services to 6 000 clients across SA.
"This reduction is great news for us and the broader LCR [least cost routing] industry," Huge Group CEO James Herbst said.
According to Herbst, Icasa's announcement confirmed and enhanced the inherent value of the company's Huge Telecom business "and we foresee the potential for significant financial benefits as a result of the reductions".
Contrary to the view of some market participants, the LCR industry would be an immediate beneficiary of the regulated price reductions.
Herbst expected market forces to drive price point parity in wholesale termination rates, with a positive impact on revenues and profits.
He welcomed lower termination rates on the basis that lower termination costs would drive down input costs, increase demand, and deliver growth in the voice traffic generated by Huge Telecom's clients.
