MTN gets fined R5 million over compliance on WhatsApp bundles price hike
Companies / 10 September 2019, 08:00am / Dineo Faku
JOHANNESBURG – The reputation of MTN, Africa’s mobile giant, has been tainted again in South Africa after the communication regulator slapped the company with an R5 million fine for not giving seven days notice ahead of hiking it WhatsApp bundles in 2018.
In April 2018 MTN launched its social bundles and introduced a monthly WhatsApp bundle of 1GB for R10.
It said the public’s response to the data bundle was exceptional.
“WhatsApp usage on the MTN network increased by 300 percent in just eight weeks. An unintended consequence of the low-priced WhatsApp data has been an extraordinary increase in demand on MTN’s 3G network,” said the company.
MTN said on June 18, 2018, that it had advised Icasa that it intended to change the pricing from R10 to R20.
“This price increase was delayed in the hope that additional network interventions may have provided some relief. Unfortunately, the situation did not improve and the stability of the 3G network remained significantly at risk,” it said.
On July 12, 2018, MTN said that it notified the Independent Communication Authority of SA (Icasa) that a more significant price increase of the WhatsApp bundle to R30 would be necessary.
MTN followed this notification to Icasa on July 13, 2018, with a letter by MTN SA chief executive Godfrey Motsa to Icasa's chief executive requesting leniency on the Icasa requirement that all pricing changes may only be affected seven days after the notification of the regulator.
In the letter, Motsa highlighted the significant risk MTN’s 3G network was facing because of the extraordinary spike in traffic and requested leniency to affect the pricing changes before the seven-day notice period had passed.
“We were very aware of the required Icasa timing, which is why we applied for leniency, but this was a tough situation and, at the time, we did what we felt necessary to protect the connectivity of millions of South Africans,” the company said.
Arthur Goldstuck, the managing director at World Wide Worx, said yesterday that the fine was a blow to MTN and was an indication that the company was not paying enough attention to rules and as a consequence consumers would be more cautious in dealings with the company.
“MTN said it was forced to increase the prices urgently. The real issue here is that operators are slow to drop prices, but act swiftly to increase them,” he said. “For an operator to be seen as not taking compliance seriously enough is damaging to its reputation among both shareholders and consumers. It might be a small fine, but it is a blow to its image, especially in South Africa,” said Goldstuck.
Icasa in a ruling this weekend said that it had issued a R5m fine to the operator for contravening Regulation 9 of the Standard Terms and Conditions.
It said of the R5m, R2m was suspended for three years. “The condition of the suspension is that MTN is not found to have contravened the same regulation again within three years of the issue of this judgment – ie September 3, 2019,” said Icasa.
MTN's share price dipped 2.72 percent on the JSE on Monday to close at R100.32.