Telecommunications giant MTN on Thursday argued that the Competition Commission has localised their recommendations to an area that accounts for only a third of the operator's current data revenue, with MTN’s pricing realistically deemed “in the middle of the road”.
The issuance of the Competition Commission’s Data Services Market Inquiry Final Report sparked pushback from mobile operators after it set out a series of hardline recommendations in an effort to lower the cost of data.
“We actually have middle of the road pricing and that is borne out again by some of the statistics in the report itself,” says MTN president and group CEO Rob Shuter, pointing out that, in prepaid pricing and their analysis, the International Telecommunications Union (ITU) statistics show midway rankings globally and in Africa.
CFO Ralph Mupita explains that of MTN’s R18-million total service revenue in South Africa for the first half of 2019, data service revenue accounted for only R6-billion, with prepaid data revenue about R3.7-billion, or 21% of total service revenue, for the first half of 2019.
The Commission’s report focused on the low-value data bundles, specifically the 500 MB offerings and below.
At the half-year, all the service revenue from prepaid data bundles of 500 MB and lower was about R2-billion – amounting to 10% of the total service revenue recorded during the period.
Further, the 30-day bundles at 500 MB and below account for 1% of the total service revenue reported in the first half of the year.
“While we do acknowledge that there is work to be done in prepaid pricing, we do not agree with the conclusion that this is because of a lack of competition and we find it odd that someone would conclude that a market is essentially competitive for voice, enterprise and postpaid data and not for prepaid data,” Shuter argues.
“We have consistently signalled that we are busy with that [pricing transformation] and we have made a lot of progress and that it is dependent on allocation of spectrum to carry traffic cost effectively.”
Shuter further highlights that, the voice market in South Africa has delivered national affordable coverage, with no consternation around voice pricing, as there is active competition within the existing market.
“If you look at the analysis in the postpaid data market, there we see a world-class network [and] market pricing that is the lowest of the Brics countries. [It] is most affordable of 12 out of 43 African countries and, in the ITU analysis of 2018, ranks 37 most affordable out of 167 countries.”
“We are disappointed with the way the report has been issued and how it has been framed. Mobile is one of the few areas where we have world-class national service accessible for all South Africans, and we believe it is regrettable and unnecessary that the report has painted the industry in such a negative light,” says Shuter.
MTN states that the report does not sufficiently acknowledge the progress made to date on data price transformation.
“We also believe it is not accurate to bucket MTN and Vodacom together, when in fact, MTN is a much smaller operator, generating roughly 50% less revenue, lower returns and actively competing against a very strong number-one operator, as well as very active and challenging number three and number four operators.”