South Africa: Telkom Competition Commission settlement confirmed

Telecoms

Telkom welcomed the formal confirmation it received today (18 July 2013) from the Competition Tribunal regarding the settlement agreement reached between it and the Competition Commission on 14 June 2013.

This agreement has been made an order of the Competition Tribunal, Telkom said in a press statement.

“I think this has been an incredible agreement reached by both parties,” Norman Manoim, the Competition Tribunal Chairperson is quoted as saying.

“It’s certainly the most impressive consent agreement that I have seen here in my years at the Tribunal and no doubt it took a lot of hard work and many hours of negotiation.”

According to Telkom, this agreement marks the beginning of a new era in the communications sector and brings to a close a variety of complaints against Telkom lodged at the Competition Commission during the previous regulatory environment.

“We believe that the conclusion of this agreement is an essential element of our transformation journey,” Maseko said.

“Concluding the agreement enables Telkom to focus on aspects of the business that are critical to its future success. These include improving the profitability of the business, enhancing the service that customers deserve and ensuring the long-term commercial sustainability of the company,” said Maseko.

Telkom said it will now focus on the implementation of all the provisions of the agreement and the compliance processes it has committed to put in place. The company said it is committed to complying with both the spirit and letter of the agreement.

Terms of the Competition Commission agreement

The terms of the agreement include an admission of guilt by Telkom, a R200-million penalty, a functional separation between Telkom’s retail and wholesale divisions, and wholesale and retail pricing commitments for the next five years estimated to yield R875m savings to customers.

The functional separation will include, amongst others things, instituting a transfer pricing process, separate internal accounts for specified products and improving the behaviour of employees of the company through a code of conduct.

Telkom said that the agreement also makes provision for annual internal audits to confirm compliance, with the first independent audit to be completed within six months of the confirmation date.

“Telkom is confident that these mechanisms provide a high level of transparency to all parties in the ICT sector and marks the beginning of a new era for the company,” the company stated.