Vodacom, MTN, Telkom horrifically criminal – analyst

 ·30 Sep 2013
Corruption bribery

Forthright analyst, Hlelo Giyose believes that South African telcos have behaved in an abnormally criminal way for many years.

In an interview on MoneyWeb, Giyose, who is chief investment officer of First Avenue Investment Management, said: “If you think that construction companies behave in an extremely criminal way with regard to collusion I think telephone companies have behaved in an abnormally criminal way in this economy for as long as we all can remember.”

The analyst said that when Telkom was a monopoly, it “did horrendous things to the consumer, it continues to do so”.

MTN, Vodacom are just horrifically criminal. It’s just that we have such a moronic regulatory policy, our Competition Act is terrible, it doesn’t criminalise certain behaviour,” Giyose told Moneyweb’s Hilton Tarrant.

“There is absolutely no reason why a cell phone minute should be a luxury, should be a brand and not a commodity, it’s holding the economy back. South Africa, despite all this competition we’ve seen and tariffs coming in, is still the third or the fourth most expensive market in terms of cell phone minutes, it’s incredible,” Giyose said.

The analyst pointed out that data is still one of the most expensive market in the world, leading to a slow rate of communication across the economy, and the inability of companies to have certain strategies online.

“Online retail and e-commerce strategies are lagging behind because of that. So we don’t think that any company in South Africa, really any mobile or telephone companies in South Africa has earned the right to merge with another company and strengthen on top of such inefficiencies,” the analyst said.

Vodacom and Neotel

He said that if the SA market was deregulated and highly competitive, a potential merger between Vodacom and Neotel could be beneficial for the consumer.

On Monday (30 September) Vodacom and Neotel on Monday confirmed that they have entered into exclusive discussions regarding a potential acquisition of 100% of the shares of Neotel by Vodacom SA.

“But what’s the point of participating in a technologically driven industry where the company benefits and the consumer doesn’t,” Giyose said.

“If it happened it would be a tragedy. You can see why Vodacom wants it, though; it gives them spectrum, number one, and it gives them just a vast array of convergence opportunities and multimedia in fixed and mobile and so on.”

More on South Africa telcos

Vodacom, Neotel confirm talks

MTN CEO warns “destructive” rivals

Telkom: time to stop subsidising Vodacom, MTN

Suspended MTN boss foils extortion attempt

Suspended exec lashes out at MTN: report

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