Publications
Partners
Port Elizabeth - MTN Group [JSE:MTN] booked a few pages in the papers on Sunday to hit back at Cell C and Telkom, which have taken the company to task over the last few weeks for its legal action to postpone changes to some charges to reduce the cost of cellphone calls.
MTN and Vodacom [JSE:VOD] instituted legal action against the Independent Communications Authority of SA (Icasa) to prevent plans to reduce termination charges from the current 40 cents to 20c.
The termination fee is the fee cellular users pay when making a call from one network to another, i e the fee when a call terminates from one network and goes onto another cellular network or to a fixed-line network.
Last week, Telkom CEO Sipho Maseko took full-page advertisements in Sunday papers to publish an open letter to the bosses of MTN and Vodacom. In the letter he accused MTN and Vodacom of hiding behind regulations to protect their profits, rather than lowering costs to cellular users.
The week before, Cell C published an extract from MTN’s application to the court to grant an interdict against the smaller cellular firms to prevent them from lowering termination charges.
On Sunday MTN took two full-page advertisements in several papers to put its point across – in its bright yellow corporate colour to insure than nobody could miss it.
It was a costly exercise, at typical advertising rates of around R250 000 per page and more, meaning that the advertisement in the Sunday Times alone would have cost MTN in excess of half a million rand.
“We are guilty. Dear Cell C, you are right,” reads their answer to Cell C’s allegations that MTN is raking in billions and is now trying to prevent Icasa from lowering termination fees and ultimately costs to cellular users.
“We are also guilty of investing 83% of those billions back in SA,” said MTN. It said that South Africans deserve a network that works, that hardly ever drops their calls and offers world class internet access across the country.
But MTN’s latest results show that capital expenditure in SA is actually not that high. The results for the year to December 2013 were published last week, and show that capital expenditure in SA amounted to only R5.84bn from the total R30.2bn spent.
The capital expenditure in SA was just more than the SA operation’s charge for depreciation and amortisation of R3.93bn.
SA clients financing forays into Africa
The rest of the capital expenditure was spent in other African countries. The largest amounts were spent in Nigeria. MTN spent nearly R14.3bn in Nigeria, nearly double the value of depreciation of existing capital assets of R7.7bn in that country.
In addition, SA cellular users contributed 29% to MTN’s total revenue last year, but less than 20% of the capital expenditure was spent here. In short, SA consumers are financing MTN’s expansion in the rest of Africa.
Another argument that MTN voices in its Sunday advertisements to show that is it on consumers’ side of the fight is its statement that MTN is “guilty of inventing PayAsYouGo, a world-class product that opened the world of cellular connectivity to South Africans from all walks of life, instead of just the wealthy”.
Unfortunately, this statement will irritate rather than pacify poor pre-paid cellular users who pay up to twice as much for their cellular calls than the wealthy contract customers, who also receive free handsets, upgrades and gift vouchers when they sign new contracts.
Vodacom, meantime, had the wisdom to keep quiet.
- Fin24
MTN and Vodacom [JSE:VOD] instituted legal action against the Independent Communications Authority of SA (Icasa) to prevent plans to reduce termination charges from the current 40 cents to 20c.
The termination fee is the fee cellular users pay when making a call from one network to another, i e the fee when a call terminates from one network and goes onto another cellular network or to a fixed-line network.
Last week, Telkom CEO Sipho Maseko took full-page advertisements in Sunday papers to publish an open letter to the bosses of MTN and Vodacom. In the letter he accused MTN and Vodacom of hiding behind regulations to protect their profits, rather than lowering costs to cellular users.
The week before, Cell C published an extract from MTN’s application to the court to grant an interdict against the smaller cellular firms to prevent them from lowering termination charges.
On Sunday MTN took two full-page advertisements in several papers to put its point across – in its bright yellow corporate colour to insure than nobody could miss it.
It was a costly exercise, at typical advertising rates of around R250 000 per page and more, meaning that the advertisement in the Sunday Times alone would have cost MTN in excess of half a million rand.
“We are guilty. Dear Cell C, you are right,” reads their answer to Cell C’s allegations that MTN is raking in billions and is now trying to prevent Icasa from lowering termination fees and ultimately costs to cellular users.
“We are also guilty of investing 83% of those billions back in SA,” said MTN. It said that South Africans deserve a network that works, that hardly ever drops their calls and offers world class internet access across the country.
But MTN’s latest results show that capital expenditure in SA is actually not that high. The results for the year to December 2013 were published last week, and show that capital expenditure in SA amounted to only R5.84bn from the total R30.2bn spent.
The capital expenditure in SA was just more than the SA operation’s charge for depreciation and amortisation of R3.93bn.
SA clients financing forays into Africa
The rest of the capital expenditure was spent in other African countries. The largest amounts were spent in Nigeria. MTN spent nearly R14.3bn in Nigeria, nearly double the value of depreciation of existing capital assets of R7.7bn in that country.
In addition, SA cellular users contributed 29% to MTN’s total revenue last year, but less than 20% of the capital expenditure was spent here. In short, SA consumers are financing MTN’s expansion in the rest of Africa.
Another argument that MTN voices in its Sunday advertisements to show that is it on consumers’ side of the fight is its statement that MTN is “guilty of inventing PayAsYouGo, a world-class product that opened the world of cellular connectivity to South Africans from all walks of life, instead of just the wealthy”.
Unfortunately, this statement will irritate rather than pacify poor pre-paid cellular users who pay up to twice as much for their cellular calls than the wealthy contract customers, who also receive free handsets, upgrades and gift vouchers when they sign new contracts.
Vodacom, meantime, had the wisdom to keep quiet.
- Fin24
