Lower mobile termination rates have cost Vodacom close to R400 million in revenue during the last quarter, effectively slowing the operator's service revenue growth rate by 3.8%.
Speaking this morning at Vodacom's quarterly results, CEO Pieter Uys noted that service revenue was up 4.4%, but if the negative impact of lower mobile termination rates was removed, it would have been up 8.2%.
Uys highlighted that the operator saw an overall 18.3% decline in interconnect revenue during the reporting period.
Earlier this year, pressure from the Independent Communications Authority of SA (ICASA) resulted in Vodacom, MTN and Cell C dropping interconnect rates to 89c per minute, from R1.25.
With operators still reeling from the effects of the first cut, ICASA had hoped to implement draft regulations for a further rate reduction this year, to 65c per minute, with the objective of reaching an interconnect rate of 40c, by July 2012.
In May, Uys warned that if ICASA persists with the current draft, Vodacom could face seriously slowed revenue growth in the low single digits (below 5%).
“Fortunately (or unfortunately) we can expect further reductions in the mobile termination rate (MTR) and, subsequently, overall revenue for Vodacom. Vodacom, in its position as the market leader, will definitely feel the pinch more that the other operators," explains Frost & Sullivan ICT industry analyst Spiwe Chireka.
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