CyTA maintains low rates

CyTA decided to ignore a temporary directive issued by the Competition Commission ordering it to reverse its recently announced price cuts on mobile telephony rates.

In response to a complaint filed by areeba, the Competition Commission had ruled that CyTA needs to reverse its price reductions on mobile telephony rates and revert to its pricing prevailing by March 31, 2005.

CyTA said it took the decision after legal expert opinion, which says that the Competition Commission does not have the legal justification to impose such an order, which in the opinion of the Authority is against the interests of the public.

CyTA further says that the Telecom Regulator refrained from regulating the mobile telephony fees, because “apparently they concluded that there was no justification for intervention and because the Supreme Court had previously ruled that the Commission also did not enjoy such intervention rights.”

The price cut made by CyTA is justified, according to the Authority by its own costing studies and gives it a gross profit margin in excess of the minimum 14%, including cost of capital.

The Authority says its wholesale and retail pricing was not made in view of its dominant position in the market, but took into account the competitive environment prevailing in the market.

Furthermore, it says that its retail prices are 2.4% to 20% in excess of the prices charged by areeba and if it had agreed to charge as per the request of the Competition Commission, then it would be obliged to charge the public between 26% to 67% higher rates.

On the Competition Commission requesting CyTA to hike its soeasy rates by 60%, CyTA says if it would abide by the decision, then it would be making profit on capital employed at 80% as opposed to 20% under its own pricing scheme.

CyTA said it has filed a request with the Supreme Court in a bid to overturn the temporary directive of the Competition Commission.