Big changes for Vodacom and MTN in South Africa

The Independent Communications Authority of South Africa (Icasa) has implemented amendments to the Electronic Communications Act designed to address market power abuse in the mobile retail space.

The changes will force operators with significant market power (SMP) — MTN and Vodacom — to provide Icasa with confidential accounts, records, and other documents related to their operations in the space.

The authority published a notice detailing the changes via Government Gazette on Friday, 5 July 2024, after receiving written submissions from MTN, Vodacom, Cell C, Telkom, and the Internet Service Providers Association (ISPA).

“These regulations are called the Mobile Broadband Services Amendment Regulations 2024 and will come into force upon publication in the Government Gazette,” said Icasa.

Changes to the regulations include removing the requirements for operators with SMP to report wholesale price data for mobile virtual network operators (MVNOs) and access point names (APNs).

The Regulations were published on 31 March 2022, and they specify that operators with SMP must publish reports on retail prices for end-users, data revenue, retail tariffs, and wholesale prices for MVNOs and APNs.

These operators were required to publish these reports on their websites, regardless of confidentiality, and provide the information to Icasa.

The new regulations remove the requirement for those with SMP to publish confidential information on their website.

However, they must still publish reports that aren’t considered confidential publicly and share confidential information with Icasa every quarter.

The amendments eliminate certain clauses in the regulations, including the requirement to share wholesale price data for MVNOs and APNs [clause 7(e)].

ISPA, MTN, Telkom, and Vodacom, all agreed to the removal of the requirement. However, Icasa said Cell C was against its removal.

It said Cell C believes that Icasa has oversight on the regulation of wholesale prices and dominant market behaviour of SMP operators.

However, Icasa stood firm in its position to delete the regulation.

“The Authority reiterates its position to delete regulation 7(e), given that it did not find a licensee with significant market power in the APN and MVNO service markets,” it said.

The amendments also proposed removing clauses 7(f) and 7(g) related to regulating wholesale prices to MVNOs and APNs. These clauses are quoted below:

Clause 7(f) — Furthermore, if any category of retail price is below any wholesale price the operator with SMP is required to submit an explanation for the differential and fully auditable evidence to the Authority, with all assumptions clearly specified, showing that this differential is cost based or temporary or is economically or technically justifiable on other grounds.

Clause 7(g) — The Authority will monitor retail prices and wholesale prices, and in particular monitor for margin squeeze, and may refer a complaint to the Competition Commission if the Authority considers that there is a margin squeeze and there is no adequate justification for this.

While MTN and Vodacom supported the proposal to remove these clauses, Cell C, ISPA, and Telkom did not.

Telkom said the changes would cause uncertainty around how Icasa will address the abuse of market power in the mobile retail space.

ISPA argued that Icasa doesn’t have the power to request an explanation from an operator without SMP whose retail price is below its wholesale price.

“Cell C objected to the removal of regulations 7(f) and 7(g) and stated that the Authority should regulate wholesale prices with SMP,” it added.

“Further, Cell C stated that it is unclear whether the amendments are made in response to MTN’s application or due to regulatory oversight.”

Having taken their views on board, Icasa said it agrees with the arguments for the regulations to retain regulation 7(f). However, the authority doesn’t agree with retaining section 7(g).

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