The unintended consequence of the mandatory price reductions imposed on the dominant operators MTN and Vodacom by South Africa’s Competition Commission in 2020 was that it removed the only competitive advantage that late entrants had in an ineffectually regulated market. Since the introduction of the enforced price reductions which coincided with the start of the COVID-19 pandemic, Vodacom and MTN’s market share (by revenue) has grown by 3% and 2% respectively, while Cell C and Telkom’s already tenuous viability have come under extreme threat, with both companies engaged in merger and sell-off talks.
The absence of sectoral regulatory interventions, such as delayed market reviews and cost-based wholesale access to dominant players’ networks, allowed MTN and Vodacom to maintain their dominance without facing effective competition from late entrants.
While data prices have decreased for most South Africans due to operators’ strategies to attract subscribers, data pricing in South Africa remains high compared to other African countries, making it challenging for low-income individuals to access and afford the Internet. Unfortunately, the focus on regulating the retail price of data has not been complemented by measures to reduce the price of mobile devices, which continues to be a significant barrier to Internet adoption.
This policy brief assesses policy and regulatory outcomes through a market analysis and proposes policy recommendations for fostering fair competition within the mobile data market to improve affordability and universal access. Their analysis shows that, overall, the dominance of MTN and Vodacom has gone unchecked due to the failure of the Independent Communications Authority of South Africa to institute sectoral regulatory interventions.
