Telkom says lowering of termination rates could force job cuts

Telkom said a proposed lowering of South African call termination rates could force the partly state-owned company to cut jobs and services such as public phones and connections to rural areas.

The rates refer to the amount telecommunications companies can charge each other for calls between networks. The Independent Communications Authority of South Africa began a consultation process Monday to cut those rates to as low as 3 cents by October 2020 for fixed line from 8 cents this year, a move intended to boost competition and lower prices for customers. Rates for mobile calls will also be reduced.

“If the termination rate on fixed line is cut to 3 cents, it will be a calamity for the business and we will be hard pressed on jobs and certain services,” Telkom Chief Executive Officer Sipho Maskeo told reporters in Johannesburg.

Telkom is the former state telecommunications monopoly and still dominates fixed-line services. The company is about 41% owned by the South African government, according to data compiled by Bloomberg. The shares fell 0.5% to R51.16 as of 10:57 am in Johannesburg, valuing the company at R26 billion ($1.8 billion).