MTN and Vodacom shares hammered after Competition Commission findings

MTN and Vodacom have been ordered to step up efforts to lower data prices within the next two months or face prosecution by the country’s antitrust regulator.

The two networks have the potential to reduce tariffs by 30% to 50%, Tembinkosi Bonakele, the head of the country’s Competition Commission, said in Pretoria on Monday.

Changes should be “substantial and immediate,” he said following the publication of a report on the industry.

Shares of the two Johannesburg-based carriers slumped on the findings, Bloomberg reported.

Vodacom fell as much as 7.9%, the most since January, before recovering slightly. MTN declined the most since October 2018, down 5% at the time of writing.

Findings are problematic

Ahmore Burger-Smidt, director and competition law specialist at Werksmans Attorneys, says that the Competition Commission’s findings come just as the country’s operators are preparing for 5G.

“In the race for 5G capability, who is to pay for the necessary infrastructure and who should ensure that the necessary infrastructure is available? If not Vodacom and MTN, who will do this?

“Where should the funds come from for infrastructure enhancement? Vodacom and MTN should be profitable to be able to make the billions of Rands of investment annually. Will other market participants contribute?”

She added that it is is doubtful whether the timeframes prescribed by the inquiry will be achieved, while the impact on mobile network operators will be significant.

“In the midst of the 4th industrial revolution Government and mobile network operators should take hands to uplift the South African economy and capability,” she said.

“Indeed this is required, but are those that are enabling the country to move forward punished? But for being a success, are the regulators actually stating that no further spectrum should be allocated to the two biggest incumbents? What about efficiencies that networks worldwide require?”


Read: MTN, Vodacom, Telkom and Cell C must offer free daily data: Competition Commission

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MTN and Vodacom shares hammered after Competition Commission findings