An open letter to Vodacom and MTN

28 February 2014

Dear Messrs Bulbulis and Joosub

For many years we’ve been working to provide South Africans with a modern communications infrastructure. Today, we stand at a crossroads – you can hide behind regulations to protect profits, or we can all continue to expand access and lower costs.

We have been following your public statements very closely, and believe your recent actions fall short of what we can do to move the country forward. Here are some facts:

1. In 1994, mobile termination rates were introduced tsa a way for Telkom to subsidise MTN and Vodacom to build your networks. To achieve this, Telkom had to pay MTN and Vodacom significantly more than you paid us for the same service.

2. The extent of the Telkom subsidy to MTN and Vodacom has amounted to over R50bn, which realists from the disparity between the high costs of mobile termination rates that we pay you and the low rate that you pay for the same service on our fixed-line network. You claim you will be supporting smaller players, but in reality Telkom has subsidies your business for over two decades.

3. Despite your recent claims, history had shown that lowering the mobile termination rates has not stopped your capital investment, nor your return to shareholder. In fact, in 2012 Vodacom shareholders were paid R12bn in dividends, while MTN paid almost R15bn to their shareholders.

4. Lowering mobile termination rates create a more equitable playing field and – more importantly – increase access to the modern economy through expanded communications for all South Africans.

With Vodacom and MTN. Standing on the way of lowering mobile termination rates, I believe you are standing in the way of SA’s future.

Are your actions in the best interest of the country?

Yours faithfully,

Sipho Maseko
Telkom CEO