FILE PHOTO: A shopper walks past a Vodacom shop in Johannesburg
FILE PHOTO: A shopper walks past a Vodacom shop in Johannesburg

Vodacom to put R2.7bn back in its users’ hands

By Dineo Faku Time of article published Mar 11, 2020

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JOHANNESBURG - Vodacom said yesterday that it would put R2.7 billion back into the hands of consumers after slashing its data prices following an agreement with the Competition Commission. 

The first mobile network provider in South Africa to reduce data prices said the initiatives, which would come into effect at the beginning of next month, included cutting its 30-day bundles by up to 40 percent in the next two years. The group said it would reduce its 1GB of data by 34 percent to R99 from R149 on all channels and would provide further discounts on all 30-day bundles. Further decreases would be effected on April 1, 2021.

It said it would extend its zero rating offerings to schools, universities, and technical and vocational educational training colleges, where students will be able to access information for free via their portals. Group chief executive Shameel Joosub said the group had taken proactive steps to address the recommendations in the Competition Commission’s report, which was released last December.

“The agreement struck with the commission provides us with an opportunity to enter into a social contract with the regulators, our customers and people of South Africa to bring down the cost to communicate and promote digital inclusion,” Joosub said. “In terms of the agreement, and following confirmation by the tribunal, Vodacom will introduce price reductions across all its monthly bundles and provide free access to basic internet, essential services and cheaper pricing to the poorest communities.” However, Joosub said the auction of spectrum needed to be fast-tracked, adding that South Africa last auctioned spectrum 16 years ago, and the lack of spectrum was driving data prices. “Delays in assigning spectrum and completing the digital migration has curbed the pace at which data prices could have fallen,” said Shameel.

The agreement comes after the commission’s data market enquiry in December found that MTN’s and Vodacom’s data prices were excessive compared with their markets elsewhere in Africa. It recommended a substantial reduction in tariff levels for the two operators – particularly for prepaid monthly bundles – within two months of the release of the report. The commission also said evidence suggested that there was scope for MTN and Vodacom to reduce prices in the region of 30to 50 percent. Commission chairperson Tembinkosi Bonakele said the commission was hoping to announce agreements with MTN and Telkom in the next two weeks, as talks had taken longer than expected.

“They (talks) are in injury time. We had set a tight deadline of January, and we were hoping that this month we would be announcing all of the agreements, but negotiations take time,” said Bonakele, adding that the settlement was the best outcome instead of a litigation route, which would have taken up to 10 years. “Both the authorities and Vodacom realised that there was more to be gained through a settlement that resolves matters going forward than a litigation,” said Bonakele. 

Vodacom also agreed to extend current zero-rating to essential state and emergency sites. These would enable citizens to access emergency services extending to more than 20 sites, including sites of the departments of Health, Education and Home Affairs.

BUSINESS REPORT 

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