JSE-listed Vodacom has contested the suggestion of eliminating mobile termination rates (MTRs) altogether, saying it would be a counter- productive move that the group would not support.

The mobile giant was respond- ing to comments made by the Independent Communications Authority of South Africa (Icasa) that MTRs should be further reduced to between 15c and 25c, and eventually eliminated. The regulator made the suggestion based on its assessment that previous MTR cuts had not produced the intended increase in competition.

The MTR was reduced from 56c a minute to 40c a minute recently as part of a third round of cuts stipulated by Icasa’s 2010 three-year glide path. These were also meant to be the final round of cuts.

However, Vodacom CEO Shameel Joosub expected the prices to be further reduced. Nevertheless, he urged that the next glide path take into consideration where the telecommunications industry stood and what development was still required.

MTRs might be one of the many competitive measures to be used to boost subscribers and revenue, but on the back of reduced margins, the benefits of a low MTR might not be passed on to the consumer, he pointed out.

He noted that well-funded oper- ators injecting large investments into infrastructure produced higher coverage, high-quality and reliable networks and technology development capacity, which would better place the operator competitively.

Otel Telecoms CEO Moham-mad Patel previously warned against the drive for zero-termination rates as it could lead to a deterioration in the networks as reduced revenue forced cuts in capital expenditure.

He noted that it was not viable in an emerging economy that was still developing cost-intensive networks and related infrastructure. MTRs were an avenue of revenue generation that was redirected to the maintenance, expansion and establishment of operators’ networks.

Joosub added that Icasa should examine the full impact of lowering or eliminating MTRs on the operators when it embarked on its review of the call termination market.

Vodacom last year reported lost revenue of about R392-million owing to the cut in the MTR and expected another drastic reduction following the latest MTR cut.

Icasa would review the pricing structure and transparency within the call termination market and unveil its action plan “soon”.