Shares of Vodacom Group and MTN Group slumped after South Africa’s two biggest mobile phone companies were ordered to step up efforts to lower data prices within the next two months or face prosecution.
Vodacom, majority owned by the UK’s Vodafone Group, fell by as much as 7.9%, the most since January. MTN declined the most since October 2018. Shares in Telkom and Cell C’s largest shareholder, Blue Label Telecoms, also fell sharply.
Vodacom and MTN have the potential to reduce tariffs by 30-50%, Tembinkosi Bonakele, the head of the Competition Commission, said in Pretoria on Monday. Changes should be “substantial and immediate”, he said following the publication of a report on the industry.
Smaller South African mobile operators have long appealed to regulators to curb the dominance of the top two carriers, while the high cost of data has been the subject of street and social media protests using the hashtag #DataMustFall. For their part, Vodacom and MTN have both said pressure to cut fees is hurting their local businesses.
Prosecutions will mainly take place under the Competition Commission’s abuse of dominance provisions, Bonakele said. — (c) 2019 Bloomberg LP