South African telcos to pay more as regulator hikes service fee by 4.4%

South African Telecom operators such as MTN, Vodacom, Cell C, and others are set to pay more for services provided by the Independent Communications Authority of South Africa (ICASA) after the regulator announced a 4.4 per cent service fee hike, effective from April 1.

According to a notice by the Chairman of the Communications Regulator, Mothibi Ramusi, the development which draws on the telecom and technology sector will cut across its services portfolio like licenses, regulations, spectrum development, radio frequency management, cost of type approvals for communications equipment and the renewal and annual fees related to unreserved postal services.

“Effective from 1 April 2025, all [licensing and application] fees will be increased by 4.4 per cent based on the average consumer price index,” Icasa said in the notice.

ICASA explained that the cost of amending and transferring service licences for electronic communication network services, electronic communication services, and broadcasting services will increase from R78,650 to R82,111, while the renewal costs for all three licence types will rise from R7,865 to R8,211.

The notice added that the cost of type approvals for telecoms and terminal equipment, radio equipment, and all kits belonging to the “simplified” and “badge engineering” categories will rise from R6,251 to R6,526. Also, kits belonging to the “untested variant” and “tested variant” categories, along with provisional type approvals, which used to cost R3,125, will now cost R3,262, while the cost of various miscellaneous type approval-related procedures will rise to R816 from the current R782.

Read Also: MTN makes Africa’s first satellite phone call in South Africa.

For radio license spectrum fees, the unit price per megahertz (paired) will rise from R3 125 to R3 263, and the minimum fee for a satellite hub station will surge to R81,558 from R78 121.

What this means for South African telecom operators and subscribers

With the new increase, telecom operators will pay an increased fee to ICASA, resulting in an increase in operation costs and a reduction in profit margin. This poses a challenge in network expansion and upgrading as the growth of the sector might be placed into a more clouded status with a potential reduction in investment by telecom firms.

The development creates another challenge considering inflationary pressures and recent deteriorating economic conditions in the market where telecom firms operate. This is also combined with the pressure faced by big companies like MTN, Telkom, and Vodacom in various subsidiary markets.

On this ground, telecom giant MTN Group reported a significant decline in its full-year headline earnings per share (HEPS) for the year ending December 31, 2024, after it declined between 59 per cent to 79 per cent while earnings per share rose by more than 100 per cent.

While the company affixed the drop to deteriorating foreign exchange impacts on its profit amidst a good operational performance, it recorded a strong performance in MTN South Africa and a negative performance in MTN Nigeria and MTN Uganda.

While telecom operators might look to find a way around the increased fee, they might pass the burden to subscribers in the long run, causing a higher tariff for services like voice calls, data, and SMS, leading to the cutting out of more internet users due to affordability constraints.

In another development that brings succor to South African subscribers, the government revealed plans to make smartphones affordable for low-income earners by removing the luxury excise duty worth around $136.37 from April 1. The National Treasury aims to promote digital inclusion with the proposed plan.

South Africa’s Ad valorem excise duties on smartphones are currently charged at a rate of 9 per cent. The South African Revenue Service charges an ad valorem tax, or a luxury excise tax, on smartphones, over and above Value Added Tax and regular import duties, which increases the price of these devices.

“Government proposes that as of 1 April 2025, this duty rate be applied only to smartphones with a price paid greater than 2,500 rands at the time of export to South Africa,” the Treasury said in its budget statement.

It also noted that the proposal would enhance smartphone affordability at the lower end of the price spectrum and support efforts to promote digital inclusion for low-income households.