MTN fined millions after 200% price hike
MTN [JSE:MTN] has been fined R5m – with R2m suspended for three years – after it didn’t give authorities enough warning before it hiked the price of its 1GB Monthly WhatsApp bundles.
In April last year, MTN lowered the bundle price to R10. It saw a 300% increase in WhatsApp usage in just eight weeks, which it said threatened its 3G network.
In July, it hiked the price by R10 to R30.
“We did not want to take this decision but we need to protect our 3G network which is critical to millions of South Africans, especially in rural parts of the country,” it said following the price hike.
But it only gave the Independent Communications Authority of SA (Icasa) two working days’ notice before the increase took effect. It is obliged to give the authority at least seven days’ notice.
In March this year, MTN appeared before Icasa’s Complaints and Compliance Committee (CCC) for this transgression. It faced a fine of a maximum of R5m, or 10% of its annual turnover (calculated on its SA revenue alone, this would have been equal to almost R5bn).
In its defence, MTN said it informed Icasa in June that it planned to hike the price to R20, but delayed the increase in the hope that additional "network interventions" could help.
It didn't, and on July 12, it let Icasa know of the hike to R30. It sent a letter to Icasa requesting leniency to shorten the notice period, but did not receive a response before July 16, when it went ahead with the hike.
But the CCC found that “the regulation was contravened by MTN, well-knowing that it was being contravened and that the crisis was self-created".
In a ruling published this weekend, MTN was fined R5m, of which R2m is suspended for three years. The condition of the suspension is that MTN is not found to have contravened the same regulation again within three years.
But in a statement, MTN said it would fight the penalty.
“We were very aware of the required Icasa timing, which is why we applied for leniency, but this was a tough situation, and, at the time, we did what we felt necessary to protect the connectivity of millions of South Africans.”
It said the penalty should be proportionate to the transgression and that it should be rational and reasonable considering the circumstances. "For this reason, amongst others, MTN will be taking the decision on review to the High Court."
Compiled by Helena Wasserman