Competition between network providers in SA insufficient

JOHANNESBURG – Hard -pressed consumers are set for a big financial relief after the Competition Commission this week said it would compel mobile companies to slash data prices in a move supported by the government.

The provisional report into the data market described a market with insufficient competition between network providers.

The report said Cell C and Telkom Mobile have tried to challenge the dominance of Vodacom and MTN by setting lower data costs and called for an immediate decrease in the prices of data. The commission also recommended that that local and national government, under the lead of the Department of Communications, actively support the development of free public WiFi in low-income areas, including commuter points like train stations and taxi ranks, as well as public spaces like parks, shopping areas and government service offices. Affected parties have until 14 June 14, 2019, to comment on the provisional report.


The commission took a hard line on MTN and Vodacom for charging South African consumers more for data than what they charge in other countries in which they operate.

MTN in the year ended December reported data revenue of R28.4 billion from across its operations, R12bn came from the domestic business, while Nigeria, its biggest market with more than 52 million subscribers, accounted for R5.4bn. 

Vodacom in its interim results reported revenue from mobile data in South Africa raked in R11.3bn, while its offshore operations recorded data revenue of just R1.1bn. Icasa has in the past said that the price differentials between in-bundle and out-of-bundle data rates “are excessive”. 


Ofentse Dazela, a director of pricing research at Africa Analysis, said Telkom remained aggressive in the market and continued to offer the lowest-priced data bundles both in the prepaid and post-paid segments. ”The operator’s FreeMe plans have also experienced good market reception thus far, and are driving up data traffic and underpinning this growth as well,” Dazela said. 

File%20pic%20AP 1 - Competition between network providers in SA insufficient
Consumers are set for a big financial relief after the Competition Commission this week said it would compel mobile companies to slash data prices. File picture: AP


”I expect this trend to continue, although a bit of push-back should be expected from Cell C, which has recently restructured its prepaid bundles and now offers more value to prepaid customers, including free additional night data.”


The high costs of data prices were brought to the fore by the Data Must Fall movement, which emerged in 2016 and reached all the way to Parliament’s portfolio committee on telecommunications and postal services.

MTN South Africa corporate affairs executive, Jacqui O’Sullivan, said it would need to study the detail of the interim report, but that it could make some initial observations can be made.

Vodacom in an emailed said it was fully committed to meeting the commission’s 14 June 14, 2019, deadline to make further submissions and to provide comments on both the findings and the recommendations in the provisional report.


“Vodacom remains committed to its ongoing pricing transformation strategy to reduce the cost to communicate in South Africa.” 

Fitch Solutions, a unit of Fitch Group this month warned that South African mobile users’ hopes that data costs would decrease soon are slowly being eroded by the impact of load shedding on mobile operators and the economy. Fitch said high capital and operational expenditure as a direct result of load shedding had significantly tied the hands of operators in terms of reducing data and voice costs. 

BUSINESS REPORT 

Leave a Reply

Your email address will not be published. Required fields are marked *