SA fines Telkom R449 mln for ‘bullying’
JOHANNESBURG – South Africa yesterday slapped fixed-line operator Telkom with a lighter-than-expected fine of R449 million for using its dominant market position to “bully” potential competitors.
The result is likely to be seen as a victory for Telkom. South Africa’s competition watchdog, which first lodged the complaint in 2004, originally sought a fine of R3,5 billion, which the struggling company has said would be “catastrophic” and jeopardise its business.
The Competition Tribunal, which rules on anti-trust complaints, said Telkom exploited its position as South Africa’s dominant player in telecoms to block competition from other network service providers.
“Telkom impeded the growth of its competitors and retarded innovation in the market place,” the tribunal said, adding that “Telkom bullied its downstream competitors into line”.
“Telkom had to be fined something to make it politically equitable and for the Competition Tribunal not to be seen as unfair,” said Dobek Pater, a telecoms analyst at consultancy Africa Analysis.
“It’s probably an optimal way out for all parties.”
Stung by declining fixed-line usage and an expensive, failed attempt at expansion into Nigeria, Telkom has been struggling to craft a convincing turnaround plan.
South Korea’s KT Corp last year offered to buy 20 per cent of Telkom in a deal that was eventually scuppered by South Africa’s government after KT cut back its offer price.
The government has also said companies trying to maximise profits could overlook the millions of poor lacking services. Rolling out broadband services is one of the ruling African National Congress’ stated goals.
The government is currently debating making Telkom a fully state-owned company once again.
South Africa’s government currently owns just under 40 per cent of Telkom, while the state-run Public Investment Corporation holds just short of 11 per cent. – Nampa-Reuters