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Cell C claims to have lost revenue market share due to MTRs

9 Apr 2014

South African wireless operator Cell C has revealed that its revenue market share in the country has declined since 2010, when telecoms regulator the Independent Communications Authority of South Africa (ICASA) first introduced mobile termination rate (MTR) regulations, BusinessTech reports. According to documents submitted to the South Gauteng High Court in Johannesburg, Cell C has claimed that its service revenue market share in the period June-October 2013 stood at 10%, down from 10.3% in December 2010, while its larger domestic rivals MTN and Vodacom continue to hold a combined 90% of total revenues in the South African mobile market. Further, Cell C argued that revenue market share is a better indicator for sustainability in the mobile industry than subscriber market share ‘because operators require a significant upfront investment and ongoing investment for a network, IT billing systems, customer care, distribution points, sustainable channel partners, brand and customer retention’; these investments would only be recovered by a sustainable scale level, of approximately 20%-25% revenue market share, Cell C said.

As previously reported by TeleGeography’s CommsUpdate, the High Court ruled that ICASA’s decision to cut MTRs would come into force on 1 April 2014 as planned, but will only remain in place for a period of six months. MTN and Vodacom launched legal proceedings against ICASA’s decision to halve their MTRs to ZAR0.2 (USD0.019) per minute in 2014, with further cuts scheduled to follow in 2015 and 2016. MTN and Vodacom argued that smaller operator Cell C should not gain the benefits of asymmetry as it is not a new entrant, and claimed that the regulator did not follow the correct process to determine the rates.

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