What we want to see is that the prices relate more to what the costs are

Telecoms regulator

Telkom argues that average bills will only rise 5.5% - in line with local inflation - as local price rises are compensated for by falling international and long distance charges.

However, the court's decision could be reversed at a hearing at the end of January and Telkom may have to offer its customers refunds.

Consumer blow?

Telecoms regulator ICASA argues that the new charges will have a "devastating" effect on consumers.

Increasing the cost of local calls could create big problems "particularly in a country where a lot of people have been cut off because they can't afford telephones at all," Libby Lloyd, ICASA representative told the BBC's World Business Report.

ICASA has also received letters of complaint about Telkom's action from small businesses as well as internet service providers.

The dispute began in November when Telkom announced its revised rates just two weeks before new price guidelines were published.

Telkom's argument is that it is bringing local call charges into line with international norms.

Subsidy

Previously, high international and long-distance charges had allowed Telkom to subsidise cheaper local calls.

When they fell - by as much as 17% - local calls were expected to rise, but not by as much as they did, ICASA argues.

"What we want to see is that the prices relate more to what the costs are," ICASA's Lloyd said.

A Telkom spokeswoman told the BBC's World Business Report that the average rise was 5.5% - in line with consumer price inflation in South Africa.

Residential customers and small businesses will see the highest rise, as their bills increase by 7.2% and 7.1% respectively.