Reduce Data Fees By A Third To Half Or Face Prosecution, South Africa Competition Watchdog Orders

Competition Commission

Competition Commission.

Competition Commission

Two of Africa's largest two mobile operators, Vodacom and MTN, have been ordered by the Competition Commission in South Africa to cut their data prices in their home country by a third to half or face prosecution.

In a bombshell ruling that shaved 8.4% off MTN's share price and 7.8% off Vodacom's competition commissioner Tembinkosi Bonakele called the pricing "a bias against the poor".

He ordered the two dominant networks in the country to cut prices by 30% to 50%. 

“Failure to reach this agreement within two months will lead the commission to consider prosecution for excessive pricing or other exclusionary abuses," Bonakele said.

South Africa's notoriously high data prices have been a bone of contention for years, giving rise to the #DataMustFall movement on social media, which led to parliamentary hearings.

President Cyril Ramaphosa repeated his call for cheaper data pricing in his state of the nation address after his African National Congress (ANC) won a general election in May.

"Wherever we have gone young people have continuously raised the issue of the excessive high data costs in South Africa," he said.

In February finance minister Tito Mboweni argued for cheaper prices during his budget speech and yelled out "#DataPricesMustFall".

Bonakele's harsh ruling follows a years-long investigation into high data prices. A provisional Competition Commission report in April found the country's four operators Vodacom, MTN, Cell C and Telkom charged too much and penalised the poorest in particular.

“We think there is scope to reduce these prices in the region of 30-50%. We have decided we will give the industry two months to act on these recommendations, failing which we will consider a prosecution for excessive pricing," he said.

The final report found a “highly concentrated” market in South Africa, dominated by Vodacom and MTN, the two largest networks, respectively, who collectively have 70 million customers.

“There is no significant competitive constraints that the two smaller operators provide. Vodacom is a clear leader in this race,” he said, referring to Cell C and Telkom.

“As a result of this concentration and duopoly, we found that data prices in South Africa are excessive. This requires strong and decisive interventions. We have noted that we have seen recent price reductions, but we do recommend that Vodacom and MTN must meet an agreement with the commission on an immediate and substantial reduction in prices, especially of prepaid bundles.”

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Two of Africa's largest two mobile operators, Vodacom and MTN, have been ordered by the Competition Commission in South Africa to cut their data prices in their home country by a third to half or face prosecution.

In a bombshell ruling that shaved 8.4% off MTN's share price and 7.8% off Vodacom's competition commissioner Tembinkosi Bonakele called the pricing "a bias against the poor".

He ordered the two dominant networks in the country to cut prices by 30% to 50%. 

“Failure to reach this agreement within two months will lead the commission to consider prosecution for excessive pricing or other exclusionary abuses," Bonakele said.

South Africa's notoriously high data prices have been a bone of contention for years, giving rise to the #DataMustFall movement on social media, which led to parliamentary hearings.

President Cyril Ramaphosa repeated his call for cheaper data pricing in his state of the nation address after his African National Congress (ANC) won a general election in May.

"Wherever we have gone young people have continuously raised the issue of the excessive high data costs in South Africa," he said.

In February finance minister Tito Mboweni argued for cheaper prices during his budget speech and yelled out "#DataPricesMustFall".

Bonakele's harsh ruling follows a years-long investigation into high data prices. A provisional Competition Commission report in April found the country's four operators Vodacom, MTN, Cell C and Telkom charged too much and penalised the poorest in particular.

“We think there is scope to reduce these prices in the region of 30-50%. We have decided we will give the industry two months to act on these recommendations, failing which we will consider a prosecution for excessive pricing," he said.

The final report found a “highly concentrated” market in South Africa, dominated by Vodacom and MTN, the two largest networks, respectively, who collectively have 70 million customers.

“There is no significant competitive constraints that the two smaller operators provide. Vodacom is a clear leader in this race,” he said, referring to Cell C and Telkom.

“As a result of this concentration and duopoly, we found that data prices in South Africa are excessive. This requires strong and decisive interventions. We have noted that we have seen recent price reductions, but we do recommend that Vodacom and MTN must meet an agreement with the commission on an immediate and substantial reduction in prices, especially of prepaid bundles.”

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