MTN and SATRA: briefing

Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
7 September 1999
MTN: BRIEFING

Documents handed out:
Information File
Chairperson’s comments on MTN (see below)
Slide presentation by Mr J Sellschop (Executive Corporate Relations-MTN)
Slide presentation by Mr R Chaphe (CEO –MTN)

The Chairperson's Introductory Comments on MTN
The two incumbent cellular operators have been licensed to provide mobile services to their customers and also to meet certain targets regarding universal service. There is no doubt that the original calculations of the potential cellular market in South Africa have far exceeded the initial expectations. The growth of the cellular sector has simply been phenomenal.

There will be speculations on what lies behind this major growth of the wireless segment but the majority of our people are still without basic telephony. The gap between those who have a fixed Telkom line, a mobile phone and those who have no dial tone is a major concern, we must ways to narrow this gap

The introduction of a new cellular entrant demonstrates the confidence that South Africa has in the growth of the cellular market. However, we should be concern about the competitive environment in which this new entrant is going to be introduced. We need to ask ourselves if there is a need for intervention or are negotiations sufficient to regulate the entry of the new operator? SATRA should be able to provide answers on the steps that were taken to facilitate the entry of the new cellular player.

The introduction of competition and the availability of more services often lead to the dropping of prices, which is of great benefit to the consumer. However, the operators must inform the consumer about pricing and the products that are available for the potential subscriber to make informed choices. These issues are important to protect consumers and ensure that there is no anti- competitive behaviour by operators.

Policy and regulation must assist to maintain a high standard of services and to measure the performance of various service providers. There is a need to protect consumers and subscribers from unfair practices and low quality of services. Many operators and service providers have call centres that service customers. On average complaints are speedily addressed, however there are serious problems regarding the quality of services, especially the drop-calls, sound quality and the accuracy of the billing.

South Africa needs a strong consumer culture were consumers of services are aware of their rights, their complaints are speedily addressed and there is greater customer satisfaction.

MTN Presentation
Mr J Sellschop Executive Corporate Relations of MTN, and Mr R Chaphe Chief Executive Officer of MTN gave slide presentations.

Questions by committee members
MP asked why MTN chose to provide support to and sponsor Peninsula Technikon (Pentec)?

Mr J Sellschop (Group Executive of Corporate Relations –MTN) said that MTN has always worked closely with Pentec, and are happy with their decision in choosing to provide support to Pentec.

An ANC MP complained about the poor quality of sound and reception at times when using cell phones.

Mr J Sellschop informed the committee, that mobile phones transmit and receive radio signals from a series of antennas called mobile phone base stations. A base station provides coverage to people using cell phones in a geographical area. A base station houses a sensitive receiver and a very low powered transmitter, functioning at an average of 20 watts. Service satisfaction depends on the distance from the frequency. MTN are amongst the lowest in congestion of lines, with a good sound quality. He added that South African cell phone users are privileged, because both networks are approved GSM standard.

Ms Smuts (DP): MTN has to pay Universal Services Agency (USA) an annual fee of R5m, which is used to subsidise telecentres. Are you happy with the manner in which the R5m is being utilised?

Investments have been made in telecommunications. Is there a possibility of a price decrease for cellphone users, with the introduction of a new cellular network?

Mr R Chaphe (Chief Executive Officer -MTN) said that USA is a valuable vehicle for communication, and they were satisfied with the manner in which USA utilised their R5m contribution.

For commercial viability, a company must make returns on their investments, therefore it would not be realistic for the new operator to slash wholesale prices.

Ms W Newhoudt-Druchen (ANC) critisised MTN for using the word ‘handicap’ instead of disabled’, as the word ‘handicap’ is not compatible with international standards. She asked why Short Message Service (SMS) of MTN is not compatible with Vodacom.

Mr Sellschop apologised for using the word ‘handicap’. He said that previously Vodacom customers could not access an MTN customer via SMS. There is now a special number that can be programmed into an MTN phone to receive SMS from Vodacom.

Ms Vos (IFP) Asked if the latest cut in costs by MTN and Vodacom will cripple the new network?

Mr Sellschop said that MTN is actively pursuing ways and measures of providing affordable services to the community. Fixed line viability is very costly in rural areas and therefore not economically viable, because it is sparsely populated.

The chairperson adjourned the meeting to 2pm.