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Regulator tells Vodacom, MTN to lower data prices

Share prices knocked. Preliminary evidence suggests there’s scope for 30% to 50% price reductions.
Image: Moneyweb

South Africa‘s Vodacom Group and MTN Group could face prosecution if they do not agree with the Competition Commission in the next two months to lower data prices, the watchdog said in findings from an inquiry published on Monday.

By 15:32 the share prices of both companies were down around 4%.

Intraday share prices of MTN and Vodacom

Read: MTN says wrong to blame operators for data costs

Vodacom says data price cuts affected by delayed spectrum allocation

The data services inquiry was launched in August 2017 in response to a request from the minister of economic Development and after complaints from consumers about high data costs.

In its final report, the Commission recommended that the two mobile operators must independently reach agreement with the competition watchdog on substantial reductions on tariff levels, especially prepaid monthly bundles, within two months of the release of the report.

It said the preliminary evidence suggests that there is scope for price reductions in the region of 30% to 50%.

The mobile operators must also reach agreement “to cease ongoing partitioning and price discrimination strategies that may facilitate greater exploitation of market power and anti-poor pricing.”

“With respect to the above recommendations on the level and structure of pricing, should an operator fail to reach the required agreements with the Commission within the specified timeframes, the Commission will proceed to prosecution under the appropriate sections of the Act,” The Commission said in a summary of its report.

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Data prices were 50% too expensive more than 7 years ago.

Government interference is never a good thing.

Patels enthusiasm does not give me a warm feeling either.

Want to invest in SA?

Not me tank you.

My guess is that the cheaper the data, the more it will be used, and by more people. So the net drop in gross revenue will not be as large as expected by some. I have no facts to base my expectation on. Other than gut-feel. So I may be wrong. Price elasticity, I think, needs to be researched.

Data will be used when there is a NEED for that data.

They are not going to use much more merely because it is cheaper. Maybe the kids will persuade mommy and daddy that they can download more useless movies and games. That in itself is destructive.

Competitions Commission. A business destructive self serving weapon of mass destruction?

Why just MTN and Vodacom? IF prices too high customers can go to Telkom and Cell C. There is competition. Nothing is stopping customers moving

This ruling s/be challenged in court. The last thing SA needs at this time is profitability destruction though incompetent authoritarianism.

…and of course AMSA had to shut down the Saldanha plant due to higher regulatory tariffs (Eskom, Municipalities, rail) that are never checked. Price controls ala Zim, and we know where Zim’s economy is now. Treasury has no funds, and if these companies become unprofitable due to this short-sighted and illogical move, please SA do not cry for spilled milk! Vodacom and MTN can start with mass layoffs ala Multichoice in response to this uncalled for business interference.

I like a freebie as much as anyone but price control was one of the cornerstones of communist thinking. One of the many reasons which lead to the disintegration of the Soviet Union was they were falling behind in the IT sector in comparison to the West (Microsoft, IBM, Oracle, SAP etc) which obviously impacted on the entire Soviet economy. But there was no incentive for anybody to invent anything since the State owned all methods of production. So they all stopped thinking and got drunk on vodka to the point where low productivity brought the economy to its knees. “The Economist” called Communism “mankind’s worst blunder” for a reason. Price control can be as destructive as monopolies.

Aagh dear Regulator.

Please just nationalise the companies.
Then you can then appoint your own Board of Directors. (All of your friends)
Think about it – You can then Eksdom and SAA them as SOE’s to your hearts content.
Looking forward to all the free data

What exactly is the difference between expropriation without compensation and price controls? The effects are the same. Equity is stolen from shareholders to be redistributed among voters. The GEPF are shareholders in Vodacom and MTN. They are expropriating their own assets! They are bribing themselves with money from their own purse!

Price controls lead to the unavailability of products and services. Ask the consumers in Zimbabwe.

If these guys are so profitable, they are actually subsidizing the data cost of the poor, through their tax contributions that fund the social grant. Myopic and naive officials use price controls to buy votes for their political masters. It is the negative effects of socialist policies that prevent competition from exploiting high margins and driving down the cost of data. This implies that it is the government itself that is to blame for the high cost of data.

Instead of implementing business-friendly economic policies, the ANC forces the private sector to pay for ANC failures. The NHI is another step in this direction.

Never underestimate the severity of the foolish mistakes made by people who call each other Comrade.

The poorest of the poor also needs data. OK?

Poor people also need safe and reliable transport to work and back but you never see authorities clamping down on the taxi industry.

Compare our mobile data prices to other countries. Then decide whether you are being bent over.

For $50pm you get entirely unlimited mobile data in the US. At a nominal exchange rate that is 750 Runt.

IF you can navigate Vodacom or MTN offers and make sense of it you might get 20Gb per month for that.

Absurd, especially since most of the backhaul from data intensive apps never leave our shores.

I anybody can find us a deal for December that is not a 24 month contract – basically want 1000Gb for the month – please give pointers where it will not cost $1000

For €20/month I get unlimited data in Austria.

Yes -but the staff in Austria work , are managed, intelligent and educated.
MTN, Vodacom staff etc are not productive

The ANC is buying votes for the next election.

End of comments.





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