Mobile operators have been behaving uncompetitively by charging too much for Internet connectivity and could face prosecution if they do not drop prices withing two months, the Competition Commission said yesterday.

The commission's final data services market inquiry report has found that current prices exclude many poor and disadvantaged people from participating in the digital economy. It also said operators charge more for data services in SA than they do in other markets where they operate, and they had to commit to cutting prices, notes Business Day.

Trade & Industry Minister Ebrahim Patel said that data costs are critical to the growth of the economy. Studies have shown a correlation between Internet access and economic growth, especially around education and getting more digital businesses started.

In April a provisional Competition Commission report had accused local mobile operators MTN, Vodacom, Cell C and Telkom of overcharging consumers and penalising those with lower incomes the most.

Full Business Day report

MTN and Vodacom lost R22bn of their combined value yesterday, says another Business Day report.

It notes the ultimatum on pricing is likely to be seen as a victory for consumers, whose social media and street campaign against expensive data gained traction in 2017 when the Competition Commission set up an inquiry into the sector.

For MTN and Vodacom, which control about 70% of the SA mobile industry, it comes as a blow to one of their biggest profit sources as data sales constitute an important source of their revenue. The share price of MTN, which makes R12.9bn, or a third of its SA revenue, from Internet connectivity sales, dropped as much as 8.4% to levels last seen in March when the company was in court in Nigeria to defend $2bn (about R29bn) in tax evasion charges.

The commission said there was scope for price reductions of 30%-50%.

The findings have also turned the spotlight on the government’s failure to auction spectrum – a radio frequency that allows mobile phone operators to send voice and data over the airwaves – which mobile operators have long argued was vital to bringing the cost of Internet data down.

‘For more than a decade, (the) government and regulators have failed to release the spectrum that the mobile industry has so critically required to bring down the cost to communicate,’ MTN said in a statement.

‘To simply lay the blame for data costs at the foot of the operators is wrong.’

MTN said it had to compensate for the lack of spectrum by spending more than R50bn in the past five years to build a network covering 95% of the population with 4G-enabled smartphones, without having been allocated long-term evolution spectrum.

Full Business Day report