While the effective prices of data in South Africa may be well below the advertised price of the 1GB measure used internationally, users, especially those in lower income category, are spending significant portions of their income, around 20%, on relatively small amounts of data (1GB). This is because data prices still remain relatively high, but also because people are using a wider range of services more extensively. This now requires operators to build out next generation networks and increase their international and local capacity to meet demand and attempt to retain the quality of their networks.
As a result they are collectively investing billions of dollars (over ZAR20 million between Vodacom and MTN in the current financial year alone) in network extension and upgrades for which they are required to ensure yield good rates of return for their shareholders. Doing so ensures further investments to compete effectively. Whether they are price gouging is unclear without a comprehensive cost analysis of their business and indeed the long overdue market review, in order determine dominance and abuse of dominance in the market.
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