MTN rejects Commission’s report on high data prices

Mobile telecommunications company MTN has rejected the findings of the Competition Commission into its pricing of mobile data in what it says is an early reaction before studying the contents of the report more closely. The telco insists that the greatest hurdle to data pricing reduction is the lack of spectrum in South Africa despite the Commission’s finding that this is not the case.

READ: BREAKING NEWS: Vodacom and MTN in trouble due to high prices

Godfrey Motsa, CEO of MTN SA says industry, policymakers, and regulators in South Africa must collaborate to coordinate policy objectives as to how spectrum will be allocated in order to drive down cost.

“We agree that costs must continue to fall and competition needs to grow. However, the risk is that by breaking the required spectrum into too small chunks or to create middlemen, operators will lose the ability to deliver networks that are economically viable and efficient – telecoms is a scale business,”

MTN says it has had to get innovative with the little spectrum it has, resulting in significant “refarming” of spectrum to allow it to keep enhancing its 3G and 4G coverage to connect the unconnected resulting in the investment of R50 billion in its infrastructure in the past five years alone, an investment it claims has become “simply unsustainable”.

While Vodacom is yet to respond to today’s findings, its CEO Shameel Jossub said it would only be able to lower prices once more spectrum is available when he presented the company’s financial year results three weeks ago.

“In South Africa, a key focus remains on the policy and regulatory environment where we will continue to participate in the various processes currently underway to assign available high-demand spectrum. While we have made significant progress in our pricing transformation journey, spectrum availability is a key lever to accelerating data price declines,” claimed Joosub in a company announcement.

James Hodge, Chief Economist at the Competition Commission said the impact of spectrum allocation on the high cost of data in South Africa is being overplayed by the operators during the presentation of the Data Services Market Inquiry press conference this afternoon.

“Looking at the two dominant operators Vodacom and MTN’s pricing in their other markets in which they operate all of that confirms that South African prices are higher than they ought to be especially when we look at prices across the other operations and we often see that the prices in South Africa are close to double what the next most expensive country is.

We are told – and we were told after the preliminary report that this is because we lack spectrum in South Africa and in fact the blame should be laid at the door of government and that South African networks are of a higher quality and this costs money however what we’ve done in this final report is look at profitability which then accounts for any of the costs so if there are additional costs form lack of spectrum or better quality that would be reflected in the costs table and profitability.”

The Competition Commission has given MTN and Vodacom two months to reduce data prices or face prosecution. The inquiry into data costs was initiated in August last year after the Department of Trade and Industry Miniter Ibrahim Patel raised concerns about the high cost of data with the Competition Commission.