MTN fined R5 million for WhatsApp price hike

MTN has been issued a fine by ICASA’s Complaints and Compliance Committee (CCC) for not observing the required notice period when increasing the price of its 1GB WhatsApp data bundle.

The fine comprises a total of R5 million, of which R2 million is suspended for three years following the date of the ruling.

MTN was found to have contravened regulation 9 of the standard terms and conditions by not notifying ICASA at least seven days before changing the price of its monthly 1GB WhatsApp data bundle to R30.

“The contravention, even considered within its background was, accordingly, a serious contravention,” the CCC stated.

“ICASA obviously, by regulation, places a high premium on compliance with the seven working days’ notice. Only two working days’ notice was given.”

However, the committee did acknowledge that MTN faced extenuating circumstances in changing the price before the notice period had lapsed.

MTN explained that it was forced to hike the price of the bundle to avoid a potential disaster.

“The earlier implementation of the price increase was forced by technical risks whose eventual occurrence could have been catastrophic,” the ruling stated.

“The volume of traffic on the WhatsApp bundle was unprecedented, and thus it presented novel challenges to MTN.”

3G demand

MTN South Africa Executive for Corporate Affairs Jacqui O’Sullivan stated that the price change was implemented due to the unprecedented demand on the operator’s 3G network.

“In April 2018, MTN launched its social bundles and introduced a monthly WhatsApp bundle of 1GB for just R10,” O’Sullivan said.

“The public’s response was exceptional. WhatsApp usage on the MTN network increased by 300% in just eight weeks.”

“An unintended consequence of the low-priced WhatsApp data has been an extraordinary increase in demand on MTN’s 3G network,” she said.

At the time, MTN urgently invested a further R200 million in its 3G network to accommodate the huge spike in traffic.

After an initial price increase earlier in the year, MTN notified ICASA of another price increase to R30 for its WhatsApp bundle, and requested leniency regarding the regulator’s requirement of a seven-day notice period.

MTN SA CEO Godfrey Motsa sent a letter highlighting the risks to the company’s 3G network due to the spike in traffic caused by the WhatsApp data bundle price.

MTN said it did not receive a response to the letter, and on 16 July, it introduced the pricing change.

Fighting Back

“MTN is committed to compliance and to maintaining good relationships with all stakeholders and the decision to proceed, without some sort of ICASA-issued condonation, was not made lightly,” O’Sullivan said.

“At the time, we believed this was the only action to ensure the continued functionality of MTN SA’s 3G network and considering the risk posed to millions of customers had that network failed, the difficult decision was made.”

“We were very aware of the required ICASA timing, which is why we applied for leniency, but this was a tough situation, and, at the time, we did what we felt necessary to protect the connectivity of millions of South Africans,” she added.

MTN said it has considered the content of the decision and argues that the penalty applied should be proportionate to the transgression and that it should be reasonable considering the circumstances.

For this reason, MTN said it will be fighting the decision in the High Court.

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MTN fined R5 million for WhatsApp price hike