Telkom SA fined 449 million rand for “bullying” competitors

07 August 2012 | Kavit Majithia


South African regulators have fined fixed-line operator Telkom SA 449 million rand ($55 million) for using its dominant position in the market to “bully” potential competitors.

The South African watchdog first raised its concerns in 2004 and sought to hit the company with a 3.5 billion rand fine. The final result will be seen as a victory for Telkom – the operator said such a large fine as originally sought would jeapordise its entire business.

Accusations against Telkom were made by the Competition Tribunal, which rules on anti-trust complaints. The tribunal argued Telkom was exploiting its position as the country’s dominant position by blocking competition from other network service providers.
“Telkom impeded the growth of its competitors and retarded innovation in the marketplace,” the Tribunal said.

According to Dobek Pater, analyst at Africa Analysis, Telkom had to be charged a fee to “make it politically equitable and for the Competition Tribunal not to be seen as unfair”.

Telkom SA recently struggled in the market because of an overall decline in fixed-line operations and a failed attempt to expand into Nigeria. There has also been considerable growth in the east African countries of Kenya and Tanzania that has slowed the growth of the South African market.

The South African government owns 40% of the company and there are continuing talks about making Telkom SA a fully state-owned company again. The government rejected an offer from South Korea’s KT to acquire a 20% stake in the troubled operator just last year.