Vodacom, South Africa’s largest cellphone operator, said on Tuesday it has lost about $79-million in the last three months due to a regulatory rate cut.
South Africa’s communications regulator in March forced wireless operators to reduce their interconnection fees, the rate they charge to use each other’s networks.
Vodacom, which is majority owned by Britain’s Vodafone, has cut its rate for peak calls by nearly 29% to 89 cents minute.
That has cost it about R600-million so far, a Vodacom spokesperson told Reuters.
The Independent Communications Authority of South Africa has proposed that companies further reduce the rate to 65 cents per minute by July 1 and to 40 cents in 2012.
Vodacom has offered to cut rates during peak times to 50 cents by 2013.
The company said at a hearing on Monday that the regulator’s proposed cuts would have a “devastating” effect on its business, according to a copy of its presentation obtained by Reuters.
Vodacom also wants separate interconnection rate reductions for peak and off-peak periods. — Reuters