South African regulator tells Vodacom, MTN to cut data prices
* Telecom shares drop after regulator recommendations
* South Africa data prices higher vs other countries
* Vodacom, MTN may face prosecution if they don't comply
(Adds details of report, share price, MTN and Vodacom comment)
By Nqobile Dludla
PRETORIA, Dec 2 (Reuters) - South Africa's Vodacom
and MTN could face prosecution if they do not agree to
cut data prices in the next two months, the country's
competition watchdog said on Monday.
Shares in Vodacom closed down 5% at 115.07 rand, a
three-month low, while MTN was 6.4% lower at 90.40 rand, its
weakest in nearly nine months. Smaller mobile rival Telkom's
shares dropped 4.2% to 44.93 rand.
Competition commissioner Tembinkosi Bonakele told reporters
that a data services inquiry launched in August 2017 had shown
prices charged by Vodacom and MTN were higher in South Africa
than in other African markets in which they were operating.
The same was true when comparing local data costs with those
outside Africa, Bonakele said.
Vodacom and MTN have argued that such comparisons are
uninformative because cost and quality differences across
countries, including spectrum allocations, may account for the
differences in pricing, the watchdog's report read.
The inquiry was launched in response to a request from the
minister of economic development, and after complaints from
consumers about high data costs.
Four main companies dominate South Africa's wireless
broadband market, including MTN and Vodacom, which control about
70% of the market.
The commission found that the two companies' dominance had
hindered price-based competition, with the challenger networks
of Cell C and Telkom Mobile unable to effectively
constrain the larger players.
In a response to emailed questions, Telkom said it was
pleased that the inquiry "has affirmed the view that the South
African market is a duopoly with no effective competition."
In its final report, the commission recommended that Vodacom
and MTN must independently reach agreement on "substantial
reductions" on tariff levels, especially prepaid monthly
It said the preliminary evidence suggested there was scope
for price reductions in the region of 30% to 50%.
The mobile operators must also agree terms to stop
strategies that may facilitate greater exploitation of market
power and anti-poor pricing, it said.
If the companies fail to reach agreement with the
competition watchdog over the recommendations within the
specified timeframe, they could face prosecution under
Other regulatory interventions included a proposal that
mobile operators be forced to give prepaid subscribers a
"lifeline package" of daily free data, and requirements for
Vodacom and MTN to agree appropriate pricing of roaming deals.
MTN said it was wrong to lay the blame for the country's
data costs with operators because the greatest hurdle to data
pricing reduction remained spectrum allocation, for which the
government is responsible.
Vodacom gave a similar view, with spokesman Byron Kennedy
adding that Vodacom had reduced its effective data price by
about half since March 2016.
South Africa's President Cyril Ramaphosa told an investment
conference early in November that his government had started the
process of releasing high-demand broadband spectrum and that a
policy framework had been published.
(Reporting by Nqobile Dludla; Editing by Tim Cocks and Jan
First Published: 2019-12-02 15:29:01
Updated 2019-12-02 19:56:35
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