Telkom faces the music: Fine could be crippling

Telkom will appear before the Competition Tribunal on Wednesday in a case which may see the company go bust, the South African Broadcasting Corporation’s (SABC) news reported on Tuesday.

The Competition Commission has asked the tribunal to find Telkom guilty of excessive pricing and abuse of the market and wants the company to be fined R3.5-billion, the broadcaster said.

Eight years ago, an investigation by the commission found that Telkom was guilty of charging excessive prices to smaller independent companies—which relied on the company’s network infrastructure to provide data services like the internet and SMS.

The commission also found that Telkom was discriminating against the independent service providers in that its charges were less for companies affiliated to it.

But the proposed R3.5-billion penalty has raised a few eyebrows, SABC reported.

“Any fine of R3.5-billion is very big for any company in South Africa to pay and you could have a problem where the company’s survival at stake,” Mike Schussler, director of Economists.co.za, was quoted as saying.

“When you look at that kind of fine in a company that’s really got declining revenues, if you really look at it, it’s really going to be difficult for it to survive under that sort of fine and I think we need to get the balance right between competition and the ability of a company to carry on.”

Telkom is expected to centre its argument around this when it takes the stand on Wednesday, SABC said.

The company is expected to first argue for the case against it to be dismissed, failing which the penalty against it should be symbolic rather than punitive in nature.—Sapa