The Competition Commission of South Africa has slammed the country's most successful cellphone companies for being 'anti-poor'.
Its provisional report on the cost of mobile data found that local prices compare poorly with other Brics and SADC countries, with MTN and Vodacom charging higher prices at home than they do in markets outside South Africa.
On the Breakfast Show with Kieno Kammies, Commissioner Thembinkosi Bonakele explains how the research was conducted.
We started by asking for information from stakeholders, lots of civil society groups, we asked for information from operators themselves, we used some of the data from Icasa and then we collated some of the data ourselves from other global sources. public hearings on question— Thembinkosi Bonakele, Commissioner - Competition Commission
Bonakele says this was followed by public hearings focused on the question of whether the price of data in South Africa is high.
The answer was a resounding yes, prices are high in South Africa.— Thembinkosi Bonakele, Commissioner - Competition Commission
Bonakele says the Commission was particularly shocked by the fact that these high prices hit the poor the hardest, as they buy smaller bundles of data.
He outlined the dominance of Vodacom and MTN and their high profit margins in the local market.
The likes of Telkom and Cell C have to scramble for customers. partly because their network tends to be poor... This is the outcome of a market that has failed.— Thembinkosi Bonakele, Commissioner - Competition Commission
It's very clear that there are exorbitant prices here and it's leading to very good profits for the incumbents.— Thembinkosi Bonakele, Commissioner - Competition Commission
We've seen profit margins in the order of 30% in South Africa. When you look at comparable countries you see profitability margins of about 12%.— Thembinkosi Bonakele, Commissioner - Competition Commission
Bonakele goes on to evaluate the arguments the big cellphone companies put forward for their high prices in South Africa, like better quality infrastructure and service.
Take a listen:
This article first appeared on CapeTalk : 'We've seen profit margins of 30% in South Africa'