South Africa: MTN accused of anti competitive behaviour for allegedly selling bulk SMSes at much lower rate

Telecoms giant MTN is accused of anti-competitive behaviour by abusing its stronghold in the cellular market by selling bulk SMSes cheaper to its own clients than to its competitors. MTN is the only supplier that can process SMSes on the MTN network.

In terms of an agreement between MTN and other networks and wireless application service providers (Wasps), MTN had committed to sell SMSes to them at between 11.1c to 14.3c an SMS.

The Star has seen a copy of an interconnection agreement between MTN and other networks. In it, MTN undertakes to sell to the market at no less than 11c an SMS.

A whistle-blower inside MTN says MTN’s Enterprise Development Unit (EBU) is selling SMSes to the banks at 8.5c an SMS, deliberately undercutting all the other service providers despite specifically contracting with them not to. The source said that MTN’s chief digital officer, Ernst Fonternel, had not been informed of this questionable business practice by the MTN EBU.

“We are the only network supplying the service and other networks and smaller service providers, mainly black owned, have to buy from us to sell to their customers,” the source said.

Wandla Matandela, MTN EBU chief executive, said: “Not true. MTN strives for the highest standards of fairness for all customers and competitors, and has strict TCF (treat customers fairly) policies and strives to treat its Wasp customers in line with that policy.”

After further investigations, The Star sent more questions to MTN which they failed to respond to at the time of publication. The publication also asked for the company to respond to the allegation that MTN is selling Bulk SMSes to its own customers for less than 11c an SMS and whether Matandela denies entering into agreements with MTN clients at below 11c.

“He (Matandela) knows you must have one of his agreements with MTN clients where they sell the SMSes at 8.5c per SMS, so he won’t respond. He knows you caught him out,” the source said.

The Star is awaiting responses from regulating authorities including Icasa and the Competition Commission.

In a response to The Star’s questions, MTN denied any allegation of it being in breach of its license and interconnection deals.

“There should be no reason to believe that MTN is discriminating and/or being anti-competitive with SMS rates. MTN is committed to fully cooperating with all regulators in all matters which may require MTN’s participation. We have the minutes of the Wasp AGM on March 24 2021.”