The changes will become effective from the start of next month.
From 1 April 2020, Vodacom South Africa customers:
- will pay R99 for a 30-day 1GB data bundle instead of R149;
- can expect more price decreases from April 2021; and
- will have access to free web-based services through a platform called Connect U, which will enable them to browse, among others, Facebook Flexi.
The cost of dominance
The network provider’s move was prompted by the findings and recommendations of an inquiry into data prices. The inquiry was conducted by the Competition Commission at the urging of economic development minister Ebrahim Patel.
Patel announced the inquiry in 2017, and the Competition Commission published its final report at the beginning of December 2019.
One of the inquiry’s findings was, “Vodacom South Africa is not only a highly profitable business, but it is to such an extent that there is a prima facie case for excessive pricing in terms … of the Competition Act against Vodacom South Africa.”
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Vodacom South Africa is the country’s biggest network provider. In addition to South Africa, the Vodacom Group has operations in Tanzania, Kenya – through its joint venture with listed telecoms operator Safaricom – the Democratic Republic of the Congo, and Ghana.
Too big and too dominant
In its final report, the Competition Commission noted concerns including:
- “Our assessment of the evidence and submissions received, particularly those of MTN and Vodacom, … shows clearly there are material competition concerns in the retail mobile market.”
- “The evidence is consistent with an uncompetitive market where the largest players can to a large extent price independently of the smaller players.”
- “The analysis … reinforces the provisional findings of the Commission that there remain competition concerns … that need to be addressed in order for consumers to see more affordable prices for data services. It is also consistent with the findings South Africa’s prices are higher than other countries.”
Although the Vodacom Group’s customers paid competitive tariffs in its other markets, this was not the case for Vodacom South Africa’s clients.
- “Having heard the concerns raised by the Competition Commission, we entered into a social contract with government and the public. We did this at a time when South African consumers are under financial pressure and on the understanding action will be taken by Icasa [Independent Communications Authority of South Africa] and government to auction high demand spectrum.
- “Delays in assigning spectrum and completing digital migration curbed the pace at which data prices could have fallen,” said Vodacom Group CEO Shameel Joosub.
The sale of coveted spectrum has long been a bone of contention among the country’s biggest network providers. They often cite it as the reason why South Africa has comparatively more expensive data tariffs when contrasted with peers regionally and globally.
Furthermore, the government’s delay in releasing spectrum has seen South Africa lag behind most countries on the continent in switching off its analogue signal to digital. The country missed the 2015 deadline set by the International Telecommunications Union to turn off its analogue signal.
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Challenging course ahead
In its provisional report, the Competition Commission conceded this is a major impediment. “Despite calls for the rapid release of high demand spectrum, this process has been subject to delay and litigation,” read parts of the provisional report.
“… [There] is a risk the assignment process is once more delayed due to departmental restructuring and the withdrawal of legislative changes to the Electronic Communications Act. The other threat … is that digital migration does not proceed rapidly and the spectrum is not available for use even upon assignment.”
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