South Africa’s two biggest mobile-phone companies have for years been under pressure to lower data prices for their poorest customers, and the country’s antitrust regulator is running out of patience.
Vodacom Group Ltd. and MTN Group Ltd. must agree to reduce tariffs by a further 30% to 50% within two months or face sanctions for being too dominant, the country’s Competition Commission said after a two-year investigation and several warnings.
The findings create a new headache for the two operators in their home market, where they are already battling a lack of new broadband spectrum and a slump in consumer spending. Their shares duly sunk, while analysts crunched numbers to evaluate the likely hit to revenue — if the order is enforced in its current form.
The high cost of data in South Africa has been the subject of protests and a 2016 social media campaign under the hashtag #DataMustFall, which was spearheaded by radio personality Thabo Molefe, more commonly known as Tbo Touch. He addressed parliament on the need for price reductions, arguing that data was essential for people of all incomes for online learning and doing business as well as social interactions.
Vodacom and MTN had already started to cut fees in response to regulator pressure and have said the moves are hurting their local businesses. MTN’s South African prepaid service revenue declined by 4.6% in the nine months through September.
, while Vodacom’s domestic sales fell in its first quarter.
The Competition Commission’s order to cut prices specifically refers to prepaid packages, which the regulator called excessive and particularly discriminatory against those on lower incomes.
“I think there are valid concerns if one assumes poor people mostly buy small data bundles,” Takaendesa said.
Vodacom and MTN had already started to cut fees in response to regulator pressure and have said the moves are hurting their local businesses. MTN’s South African prepaid service revenue declined by 4.6% in the nine months through September, while Vodacom’s domestic sales fell in its first quarter.
Vodacom has cut data prices by 50% since March 2016 and been hampered from further reductions by a lack of available broadband spectrum, spokesman Byron Kennedy said in an emailed statement.
“We will engage with the Commissioner on the matters that arose in the report and will comment further in due course,” he said.
A spokeswoman for MTN South Africa said the company is preparing a response.