South African fixed-line operator Telkom has accused the country’s second-largest mobile operator – MTN – of using “string along” tactics to delay the launch of Telkom’s new mobile network. In a court hearing that began this week, each operator accused the other of unreasonable behaviour in failing to agree a deal over interconnection fees – the monies that will be paid by each operator for terminating each other’s calls. According to a report in South Africa’s Business Day newspaper, Telkom argues that as it is a new market entrant, MTN has an obligation to sign an interconnection agreement with its new mobile division (Telkom Mobile) that will see MTN pay Telkom a higher mobile termination rate (MTR). It has called for MTN to charge ZAR0.89 for calls terminating on its network and originating from Telkom, but pay Telkom ZAR.093 for calls moving in the other direction (terminating on the Telkom network).

In papers submitted to Icasa – the South African regulator – MTN rejected Telkom’s proposal for a so-called asymmetrical agreement over interconnection that would favour the new entrant. “It would be inappropriate for Telkom to assert, or for Icasa to consider, Telkom as qualifying for benefits of asymmetry because it is a so-called ‘new entrant’ to the mobile market,” MTN said. “Telkom already enjoys substantial fixed infrastructure that will be shared with its mobile network (including base stations) large economies of scale inherited from its fixed volumes and economies of scope from cross- selling fixed and mobile services to its existing customer base.” The case has been adjourned until 20 September to allow MTN and Telkom to submit further documents, though the fear for Telkom is that a lengthy court battle could delay the proposed year-end launch of Telkom Mobile. Telkom – the country’s largest fixed-line operator – has been looking to launch its own mobile service since divesting its 50 percent stake in South Africa’s number one mobile player, Vodacom, two years ago.