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Cost to Communicate in South Africa

Presentation to the Parliamentary Portfolio Committee on Communications

29 November 2012

Introduction

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Neotel supports the endeavours to gather information on this important topic to reduce the general cost to communicate in South Africa.

Neotel further emphasises that it supports the government as a facilitator of competition, and the power of competition in reducing retail prices.

The roll of government should be to encourage sharing, and really support rapid deployment by all investors.

Summary of the Reduction of the Cost

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As a consequence of the reduction in call termination rates, Neotel reduced its rates for calls to mobiles services by up to 40%. In respect of our retail rate reductions for calls from our postpaid subscribers to mobile numbers (excluding VAT) is in the tables of the submission.

After the reduction in fixed call termination rates, Neotel reduced its rates for on-net calls (Neotel to Neotel) to zero during off-peak hours, and by up to 10% for calls to Telkom. Neotel’s retail rates (excluding VAT) for on-net calls and calls to Telkom’s geographic numbers from our postpaid subscribers, and Telkom’s call termination rates (WBZ and W0N) are as per the table of the submission.

Rates for calls from our pre-paid subscribers were the same as rates for calls to our post-paid subscribers from the date of launch of Neotel’s prepaid services (July 2010) until March 2012. Rates for calls from our pre-paid subscribers did not change between February and March 2012.

Neotel has lowered its retail rates by 40% over the last three years, passing on 90% of the call termination rate reductions

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R0.62 Neotel retail price reduction

R0.69 call termination rate reduction (R0.61 reduction to Cell C, 8.ta)

MTN, Vodacom

Cell C, 8.ta

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Rates for calls to Mobiles

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Period To operator Retail rates Mobile call termination rates

Before March 2010 All 1.54 0.96 1.25 0.77

March 2010 – February 2011

1.20 0.96 0.89 0.77

March 2011 – February 2012

MTN, Vodacom 0.95 0.85 0.73 0.65

Cell C, Telkom Mobile 1.20 0.96 0.88 0.78

From March 2012MTN, Vodacom

0.92 0.82

0.56 0.52

Cell C, Telkom Mobile 0.64 0.60

Rates for calls to fixed

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Period Retail rates to Telkom

Retail rates to Neotel

Telkom’s W0N call termination rates

Peak Off-peak Peak Off-peak Peak Off-peakBefore March 2010

Local 0.30 0.15 0.15

0.23 0.12Regional 0.40 0.25 0.29National 0.50 0.29 0.38

March 2010 – February 2011

Local 0.30 0.15 0.15

0.23 0.12Regional 0.40 0.25 0.29National 0.50 0.29 0.38

March 2011 – February 2012

Local 0.30 0.15 0.15 Free

0.20 0.12Regional 0.40 0.25 0.29 FreeNational 0.50 0.29 0.38 Free

From March 2012

Local 0.30 0.15 0.15 Free

0.15 0.12Regional 0.40 0.25 0.20 FreeNational 0.45 0.29 0.25 Free

Conclusion

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Neotel hopes that this information assists the PCC in its endeavours to assess the impact of efforts to reduce the cost to communicate.

Neotel hereby wishes to emphasize that endeavours to assist and will certainly participate in processes to allow parliament to focus on its oversight role, on those accountable for enabling the market

Questions

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