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Johannesburg - The cost of mobile ownership in South Africa is among the lowest worldwide, with cellphone penetration much higher than in similar markets, said MTN South Africa MD Karel Pienaar.
He was reacting to claims that South African telecommunications costs are among the highest in the world, which he said are factually incorrect.
"In addition to fair and innovative pricing, enabling calls at extremely low rates, South Africa has one of the lowest costs of mobile ownership in the world. People can get connected and stay connected for very little - 49c for a Sim card and one call every 90 days," said Pienaar.
"This low cost of ownership, plus the rapid expansion of mobile networks, has given South Africa a mobile penetration rate - the percentage of the population with a mobile connection - of 104%.
"India, with which we are often compared, has a penetration of only 37%, concentrated in the cities, while our networks reach 98% of our people."
The government on Tuesday ordered a cut in mobile phone charges by the end of November.
The parliament's portfolio committee on telecommunications has proposed interconnection rates should be cut to 60c per minute during peak times by November and then by a further 15c annually until 2012. Operators currently charge each other R1.25 per minute during peak times.
Speaking to Fin24.com shortly after discussions with the portfolio committee on Wednesday in Cape Town, Pienaar said MTN supported a gradual reduction of interconnect rates.
"Competition has already reduced prices over the last 10 years and will continue to do so in the future," he said.
Keeping numbers under wraps
Pienaar said that MTN had "nothing to hide" in its cost structure, but defended the firm's need not to disclose its numbers publicly.
"We're happy to have the debate, but not publicly," he explained.
According to Pienaar, interconnect is just one revenue stream for MTN and does not have a significant impact on retail cost.
He said that profits for telecommunications providers are under pressure in South Africa.
"MTN has invested more on infrastructure in the past three years than it has produced in profit during that period," said Pienaar.
"We are investing R7.5bn this year in infrastructure expansion, technology and quality improvements for stadium coverage during the 2010 Fifa World Cup," he continued.
"This huge investment is based on a long-term view of the revenue the investment will produce. If you reduce that revenue through interconnect cuts, and then seek further reductions in other revenue streams such as retail tariffs, our business model will by necessity have to alter."
Pienaar commended the department of communications on its handling of the debate. He said current discussions provided an opportunity for South Africa to outline objectives for the telecommunications industry that would underpin its progress. He added that these objectives should extend beyond the reduction of interconnect rates.
- Fin24.com