The effects of lower mobile termination rates in South Africa

The effects of a 90% reduction in mobile termination rates (MTRs) are evaluated over the period between 2009 and 2017 in South Africa. Prepaid prices and quality-adjusted postpaid prices declined by over 40%. However, only approximately 30% of the decline in prepaid prices and 60% of the reduction in quality-adjusted postpaid prices can be explained by lower MTR costs. On-net and off-net prepaid prices converged as MTR costs dropped. Regulators concerned about high retail prices and differences between on-net and off-net prices should reduce MTRs.