ICASA must weaken Vodacom and MTN – Telkom

Telkom wants the Independent Communications Authority of South Africa (ICASA) to use the upcoming spectrum auction to create a more competitive market.

This comes after Vodacom and the Competition Commission reached an agreement which will see the mobile operator cut its monthly mobile data bundle prices by over 30%.

Telkom is not impressed, however. Group executive of regulatory affairs Siyabonga Mahlangu told eNCA that Vodacom’s prices after the latest cuts are still far higher than theirs.

“As Telkom we are still very competitive, very affordable in the overall value which we offer our customers,” he said.

He said this raises the question as to how the competitive landscape will change if Vodacom is still more expensive than Telkom even after the Competition Commission’s intervention.

Problems with the structure of the market – Mahlangu

Mahlangu said the Competition Commission’s report highlighted structural problems in the mobile market which prevent effective competition and new players entering.

He said policies of the past entrenched a duopolistic market structure which gave Vodacom and MTN a big advantage over later entrants like Telkom and Cell C.

“The early-mover advantage and supportive policies have made it difficult for competition to happen in the mobile sector,” said Mahlangu.

To resolve this “market failure” will take more than just price regulations – the structure of the market must be changed, he said.

As spectrum has a “structured impact on the competition in the market”, Mahlangu wants ICASA to use it to weaken Vodacom and MTN’s position.

“ICASA must make sure its spectrum auction rules and the design of the auction favours competition and weakens the duopoly [Vodacom and MTN].”

He said Telkom anticipates that ICASA will follow the Competition Commission in targeting the Vodacom-MTN duopoly when designing its spectrum auction.

Vodacom and MTN want more spectrum

Vodacom and MTN have regularly stated that a lack of spectrum is the main reason for high mobile data prices in South Africa.

MTN CEO Rob Shuter said MTN South Africa has less spectrum than in the 21 other countries where MTN operates.

Additional spectrum is needed to increase capacity to carry the additional traffic associated with lower data prices.

“It is complex to implement this commercial strategy as we do not have the have the spectrum to carry the extra traffic,” he said on data price cuts.

Vodacom CEO Shameel Joosub echoed these views in previous statements. He said in 2018 that Vodacom could cut mobile data prices in half if they received additional spectrum.

While Vodacom and MTN want more spectrum to cut data prices, Telkom argues giving it to them will entrench their duopoly.

Siyabonga Mahlangu eNCA interview

Now read: Vodacom and MTN make it impossible for us to compete – Telkom

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ICASA must weaken Vodacom and MTN – Telkom