(Ecofin Agency) - Lower termination rates can enhance digital inclusion by making mobile services more accessible and affordable. This in turn bridges the digital divide and promotes socio-economic development.

The Independent Communications Authority of South Africa (ICASA) has rolled out its final Call Termination Rate Amendment Regulations, aiming to make telecommunications more affordable nationwide. This regulatory move, released on December 9,  targets the fees one network charges another to connect voice calls to its users, a cost component historically criticized for stifling competition and inflating retail prices. It is an amendment to the call termination regulations, 2014.

In a recent Government Gazette announcement, ICASA revealed that effective July 1, 2025, the ceiling for call termination charges for large operators will be set at R0.07, with the rate for fixed locations capped at R0.05. Further reductions are planned, dropping to R0.05 and R0.04 for large operators by July 1, 2026, and July 1, 2027, respectively. Fixed location rates will similarly decrease.

New market entrants, defined as licensees operating for less than three years, will also benefit from reduced call termination rates, starting at R0.09 from July 1, 2025, and gradually lowering to R0.07 in 2026 and R0.05 by 2027. The rates for connecting to fixed locations will also see adjustments, dropping from R0.06 in 2025 to R0.02 by 2027. ICASA emphasizes that new entrants will enjoy these asymmetrical rates for only three years post-market entry.

The South African telecom market is poised for significant growth, with a projected compound annual growth rate (CAGR) of 5.32% from 2024 to 2029, according to a report by Mordor Intelligence titled "Telecommunications Industry in South Africa: Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)."

As the market expands, large operators may need to adjust their revenue models due to the anticipated reduction in call termination rates. However, their increasing market size offers them opportunities to counterbalance these adjustments by broadening their customer base and introducing new services. Consumers are expected to benefit from reduced communication costs as competition increases and call termination rates decrease.

Hikmatu Bilali

Editing by Sèna de Sodji