Thursday, September 6, 2018

Telkom CEO warns of job losses due to regulation changes

Telkom CEO Sipho Maseko has warned of “significant job losses” due to Icasa regulations.
Icasais calling for comments on its new draft call termination rates, which were published on 16 August 2018.
“The effective date of the regulations, once finalised, will be 1 October 2018,” said Icasa.
The draft regulations propose a number of amendments, as detailed below.
  • A glide path period where a charge for terminating a call on mobile and fixed location would be 12c and 8c respectively, from October 2018 to September 2019; 10c and 5c for the period October 2019 to September 2020; and 9c and 3c from October 2020 onwards.
  • Asymmetry for small players and new entrants for the duration of the three-year glide path. The asymmetry for mobile services is proposed to be at 5c from October 2018 to September 2020 and 4c from October 2020 onwards. Asymmetry for fixed services is proposed to be 1c from October 2018 to September 2020, and fall away completely from October 2020 onwards.
Job losses
Following the publication of the proposed regulations, Maseko – in an email to staff seen by MyBroadband – stated that the regulatory measures are a challenge for Telkom.
“The call termination rate (CTR) proposal would hit us much harder than our competitors. Icasa is proposing that fixed termination rates (FTRs) should fall by 70% compared with a reduction of only 31% in base mobile termination rates (MTRs), and that MTR asymmetry which supports new entrants should be reduced,” said Maseko.
“This decision penalises Telkom much more than it does our competitors, although we are the smallest provider of mobile services in the market.”
Maseko added that it is also the largest employer in the industry, and the “champion in reducing the cost to communicate”.
“While Telkom employs 18,000 people, the two largest mobile operators together employ 10,000 staff in total.”
He went on to state that the proposed FTRs require cost reductions that are “not feasible within a three-year time frame without significant job losses”.
“In addition, they create fertile ground for foreign OTT players to go after the local fixed voice market.”
“Icasa’s decision to reduce fixed termination rates at a faster rate than the reduction in mobile termination rates when Telkom faces higher costs and supports a large work force in a country with an unemployment rate close to 30% adds additional pressure on the business.”
Maseko said Icasa will engage with Icasa on the proposed regulations.
Telkom was asked for further comment on the matter, but did not reply by the time of publication.

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