Vodacom Group and MTN Group shares fell after one of the competition regulators ruled that SA’s two largest mobile-phone companies overcharge customers for data – particularly those on lower incomes. According to a Fin24 report, the two carriers bill more in their home market than in other countries in which they operate, the Competition Commission said in a provisional report on an inquiry that began in August 2017.

Customers hardest hit are those using smaller prepaid bundles, who tend to be less well off, the regulator said.

‘Lower income consumers may be exploited to a far greater degree relative to wealthier consumers,’ said Commissioner Tembinkosi Bonakele.

The carriers must commit to reduce the price of sub-1GB packages to ‘within an objectively justifiable and socially defensible range’ of current levels, he said. Smaller carriers have long appealed to regulators to curb the dominance of the top two carriers, while the high cost of data has been the subject of street and social media protests using the hashtag #DataMustFall.

Vodacom shares dropped as much as 4%, the most in three months, while MTN fell by 2.9%.

Full Fin24 report

Vodacom claims it has reduced the cost of data in the past year. In a statement recorded in a Moneyweb report, spokesperson Byron Kennedy says: ‘Vodacom can confirm that, as part of its ongoing pricing transformation strategy to address the cost-to-communicate in SA, we have reduced the effective cost of data by 34% in the past calendar year alone.’

The report notes the Competition Commission measured SA data prices against other countries in Africa and around the world and found they compare poorly. One reason is the government’s repeated delays in providing new mobile spectrum, which would increase access and bring down costs, it said.

However, any upcoming auction should be based on a requirement for providers to cut fees and lay on services including free WiFi in public spaces. The wireless carriers’ views on the findings should be submitted by 14 June, while a final report will be published later this year.

Full Moneyweb report