Johannesburg — VARIOUS efforts under way to curb the cost of cellphone calls would be unnecessary if the industry regulator simply applied a law that has existed for five years, the communications minister has been told.

Legislation already insists that the cost of linking a call between rival networks must be based on the cost of providing that service -- not the exorbitant R1,25 a minute the operators are charging, says John Holdsworth, CEO of private telecoms company ECN.

If the Independent Communications Authority of SA (Icasa) had applied that law it would have saved consumers billions of rands.

"I suspect this has cost consumers more than R25bn in the past five years based on what the interconnection fee should have been," Holdsworth said.

ECN has sent a letter highlighting "this total regulatory collapse" to minister Siphiwe Nyanda, the Department of Communications, Icasa councillors, the Competition Commission and Parliament's communications portfolio committee.

Last week the committee lambasted the operators and Icasa for the unacceptably high fees that greatly inflate the cost of a cross- network call. The MPs were reacting to growing public demand for cheaper calls, and are determined to reduce the fees, given Icasa's continued failure to do so.

But Holdsworth says the whole process is unnecessary. "There's a confusing array of projects going on so we commissioned a legal review of the current regulations. We were staggered to discover that for the last five years there have been regulations going way beyond what they are talking about doing now."

Rules in the Chart of Accounts and Cost Allocation Manual for Mobile Cellular Services of 2004 say the fees must be based on the amount it costs an efficient operator to link a call. "If these regulations are applied -- and they should be because it's unlawful not to -- then the fee would drop to as low as 20c or 15c," Holdsworth said. "There is no need for political intervention, Icasa has just got to implement the existing laws." If Icasa and the mobile networks did not agree to obey that law, ECN might seek a high court order forcing them to do so .

The portfolio committee is demanding a fee of 60c a minute, while the operators are arguing for less drastic cuts to be introduced over time. In the parliamentary hearings last week MTN and Vodacom were reluctant to disclose their costs, but agreed to do so in private under threat of a subpoena. Icasa's softer approach was to tell the operators to sort the issue out themselves by calculating their own running costs and adding a profit margin of up to 50% on top.

Then Nyanda added more complexity by ordering Icasa to reduce the rates to a cost-based fee based on international benchmarks -- making no mention of profit -- by the end of next month.

137m contract to supply parts to Airbus for its A400M aircraft would not be affected if SA cancelled its order to buy purchase eight A400M transport planes for the South African Air Force, Denel group CEO Talib Sadik said yesterday.

The government is understood to be reconsidering the contract because of cost escalations which could make it pay see it paying up to R47bn instead of the R17bn agreed to in 2005.

Sadik told Parliament's public enterprises committee during a briefing on Denel's annual report yesterday that Denel had a separate contract with Airbus "though Airbus have the right to say whether they want to cancel it or not. But our understanding is that they would like to continue with the relationship with us."

He said there were opportunities for Denel to increase its supply of parts to Airbus as it was looking for cost reductions on the A400M and Denel could take advantage opportunity of this.

Denel was engaged in discussions with the state for a cash injection of R1,7bn to strengthen its balance sheet but in the meantime had been given state guarantees to meet its liquidity requirements. Guarantees received by end March amounted to R1,3bn and since then Denel had been given R550m.

Sadik said Denel was targeting to break even by 2012 on the assumption of the turnaround plans for Denel Aerostructures and Denel Dynamics. However the global financial crisis would intensify competition in developing markets and deepen the need for alliances and partnerships. Denel would have to focus on growing niche areas and improving efficiencies.

"Lower budgets are increasing systems' life requirement, driving growth for upgrading and services. The military are increasingly outsourcing maintenance to drive efficiency and to focus on the front-line. Reduced budgets coupled with lower threat levels and a dearth of breakthrough technology has resulted in lower new systems sales."

Sadik told the committee that Denel's total order book at end July totaled R17,8bn including confirmed contracts. This compared with the R3,7bn at end April 2006. The company had succeeded in increasing the percentage of local sales of total sales - a key pillar of its turnaround strategy - from 47% in 2005/06 to 64% in 2008/09.

Meanwhile Democratic Alliance defence spokesman David Maynier has proposed a motion in the National Assembly calling for the establishment of a special multiparty ad hoc committee to investigate the Airbus A400M arms deal.

He said the public needed to know why there was no tender process for the acquisition of the eight transport aircraft; what is the real cost of the eight transport aircraft given the claim by Airbus that the R47bn price tag was exaggerated; why there was a failure to provide for maintenance costs of the transport aircraft; and whose interests were really served by the Airbus A400M deal.

"The fact is that we cannot go through another strategic defence package-style arms deal scandal that rolled on for years and was eventually covered up," Maynier said.