Vodacom and MTN get relaxed competition rules to tackle load-shedding

South Africa’s Minister of Trade, Industry, and Competition, Ebrahim Patel, has gazetted block exemptions for energy users and suppliers in South Africa to reduce the impact of Eskom load-shedding.

The exemptions should prove to be highly beneficial for network operators, who had asked government for a diesel rebate and permission to collaborate on sharing power sources and security at their towers.

They allow collaboration between companies — even direct competitors — to help mitigate the country’s electricity constraints. This kind of collaboration usually is in contravention of the Competition Act.

Energy users, such as network operators like MTN and Vodacom, can now jointly procure and share backup or alternative energy supply. They also allow companies to negotiate and purchase electricity and related services jointly.

“These exemptions will enable energy suppliers and energy users to increase and optimise supply capacity, reduce the cost of energy or improve the efficiency of energy supply, and secure backup or alternative energy supply in order to minimise the effects of the current electricity supply constraints,” said Patel.

“Reforms in the competition law effected in 2019 provides for more flexibility when circumstances warrant it.”

“The block-exemptions have been used during the pandemic and in crises such as the July 2021 unrest, to enable competitors to cooperate to address shortages of stock or facilities. This will now also be available to companies to address the energy challenges,” the minister added.

The new regulations came into effect on Wednesday, 24 May 2023 — the date of the gazette’s publication.

Ebrahim Patel, minister of Trade, Industry, and Competition.

MTN SA sustainability and corporate affairs chief Jacqui O’Sullivan told MyBroadband that the move would help mitigate the impact of the South African electricity crisis.

“MTN welcomes the regulations gazetted by the Minister of Trade Industry and Competition on Wednesday, 24 May 2023,” said O’Sullivan.

“The Energy User and Supplier Block Exemptions will enable MTN to collaborate with competitors and vertical players to jointly procure and finance backup energy solutions; share backup power; engage in energy optimisation and infrastructure security initiatives to mitigate the impact of the ongoing power crisis.”

A Vodacom spokesperson told MyBroadband that the company is still in the process of assessing the impact of the decision and how it could bring change for the industry.

“In terms of shared infrastructure/resources across the industry, collaboration is effected in accordance with the Competition Act,” they said

“Through forums like the Association of Communications and Technology we are appealing to relevant authorities to address certain limitations to help mitigate the massive impact that load-shedding has on the industry.”

“We welcome the release of the Energy Users Block Exemption 2023 and we are still in the process of assessing its impact and the change it might bring for the industry,” they added.

In mid-May 2023, South Africa’s mobile network operators approached government requesting a diesel rebate and permission to collaborate on sharing backup power sources and security at their tower sites.

The Association of Comms and Technology (ACT), which comprises Vodacom, Liquid Intelligent Technologies, MTN, Rain, and Telkom, conveyed a message of “deep concern” about the worsening load-shedding situation in the country.

“Heightened and sustained levels of load-shedding in recent times have already resulted in a record quantum of energy shed by South Africa’s power utility Eskom in a calendar year — and we’re yet to reach halfway through 2023,” they said.

“Invariably, load-shedding is more severe during the colder months, which means that the impact on an already hard-hit ICT sector is likely to worsen.”

ACT warned that this would make it challenging for operators to keep customers connected despite them having invested heavily in backup power solutions.

“Naturally, these investments could have been better spent on accelerating rural coverage, fast-tracking 5G adoption and further addressing the cost to communicate in South Africa,” ACT said.

“So that further funds are not diverted from their intended purpose, it is crucial that the government and regulators take immediate and effective action to address the power crisis, network security as well as the issue of economic sabotage of physical infrastructure by outlining a comprehensive plan to address the problem.”

ACT asked government to make the Department of Trade, Industry, and Competition urgently publish block exemption regulations that let competitors coordinate on load-shedding solutions.

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Vodacom and MTN get relaxed competition rules to tackle load-shedding