Earlier this week, MTN Group Limited was fined the sum of ZAR 5 million (about $340.597) by the Independent Communications Authority of South Africa over an alleged corporate non-compliance. This is reminiscent of earlier development in 2015 whereby the Group’s Nigerian subsidiary was heavily fined by the Nigerian Government due to a similar offense.
Reason for the fine: According to a comprehensive report by the South African regulator’s Complaints and Compliance Committee, MTN Group contravened a session of the regulations guiding telecoms providers in the country. In specific terms, the telco failed to give the required 7 days’ notice before increasing the price of its Whatsapp bundles.
ICASA has decided to fine MTN after they were found to have contravened Regulation 9(1)(b) of the Standard Terms and Conditions for Individual Electronic Communications Services, 2010 as amended. https://t.co/SQQOgspQiq pic.twitter.com/aTumYQOTGt
— ICASA (@ICASA_org) September 9, 2019
More of the details: In early 2018, the telecoms giant launched a special Whatsapp bundle which initially cost ZAR 10 for 1GB. The cheap Whatsapp data service (which MTN would later regret,) quickly attracted millions of South Africans to start subscribing. In just two months, MTN said it recorded a 300% increase in the number of people using the service.
Meanwhile, a spike in new users meant that MTN’s 3G network soon began to experience efficiency issues as it could not handle the growing number of new users. This situation informed the company’s request that the regulator should permit a more significant increase in the price of its Whatsapp service to ZAR 30. This would enable the telco to successfully finance a planned upgrade of its 3G infrastructure.
The company went ahead to hike the price of the service before obtaining regulatory approval. It claimed that the increase was carried out as a matter of urgency, considering that its 3G network was at risk.
Following a thorough investigation of the matter, the Independent Communications Authority of South Africa ruled that MTN be fined for flouting an important regulation.
Note that even though the company has reasons for wanting to increase its Whatsapp bundle price, those in support of the regulatory fine have argued that telecoms providers are always quick to hike prices even though they are slow to reduce same.
In the meantime, it is interesting to see how the South African authority will quickly impose a fine on MTN for committing the kind of offense the Nigerian Government would probably have overlooked if it were committed by the Group’s Nigerian subsidiary.
Recall that in 2015, MTN Nigeria Plc was heavily fined for engaging in sharp practices after failing to properly register the SIM cards of its customers. The $5.2 billion fine was later reduced to $1.7 after months-long negotiations. Subsequently, payment for the fine was made in batches, the last of which was made in June.