Vestact CEO Paul Theron slated the Competition Commission’s proposals, saying they will destabilise the industry and cost the country future investments.
Last week, the Commission published its final report on its Data Service Market Inquiry which slated Vodacom and MTN for their high mobile data prices.
According to the Competition Commission, there is scope for Vodacom and MTN to cut their mobile data prices by 30% to 50%.
The Commission further said that all mobile operators must offer South Africans on prepaid packages “a lifeline package of daily free data”.
Vodacom and MTN must also independently reach an agreement with the Commission within two months on a reduction in the headline prices of all sub-500MB 30-day prepaid data bundles.
It added that Vodacom and MTN must “cease ongoing partitioning and price discrimination strategies that may facilitate greater exploitation of market power and anti-poor pricing”.
The government is now breaking the telecoms industry
Theron slated these recommendations, saying the government is not content to only break the parts of the economy which they run and are now trying to break the private sector as well.
Theron highlighted that the government’s track record related to running infrastructure companies is dismal:
- Electricity – Outages, load-shedding, sky-high price increases, theft, corruption, and in a tremendous financial crisis. It has raised prices five-fold in recent years.
- Water – Water running out, bad planning, corruption, stolen, and broken pipes, under-investment and sewage flowing into rivers.
- Roads – Full of potholes, toll gantries which are not used, reckless drivers, and no law enforcement.
South Africa’s telecommunications infrastructure and mobile networks, which are privately owned, are world-class and work seamlessly.
He said these companies, which are highly profitable, provide national coverage and excellent high-speed Internet to millions of South Africa.
He said instead of focussing on the broken industries it controls, the government has decided to mess with the successful telecoms industry.
“The government is threatening to undermine the telecoms industry, destabilise it, and scare off future investment,” said Theron.
He added that the most ludicrous proposal in the Competition Commission’s report is that Vodacom and MTN must give their competitors Telkom and Cell C a leg-up.
Theron also blasted the suggestion that mobile operators should provide needy South Africans with free services.
Other CEOs also critical
Theron is not alone in his criticism of the Competition Commission’s report on its Data Service Market Inquiry.
Telkom CEO Sipho Maseko said in a Business Day column that the Commission’s price recommendations will do more harm than good.
“Price regulation is not the answer. It is an ineffective instrument and may ultimately have unintended and deleterious consequences on employment and future levels of investment,” said Maseko.
He added that the Commissions’ recommendations related to price and free data may ultimately “even push smaller players out of the market completely”.
African Rainbow Capital (ARC) CEO Johan van der Merwe concurred with Maseko, saying the Commissions’ recommendations could do serious damage to business.
According to Van der Merwe, the government should focus on increasing competition instead of interfering in cellphone data prices.