Behind-the-scenes talks to save Vodacom

. . . as 90-day license ultimatum lapses

KANANELO BOLOETSE

MASERU – The 90-day period that was given to Vodacom Lesotho to justify why its license cannot be revoked by the Lesotho Communication Authority (LCA) has lapsed, and now talks are being held behind the scenes in an effort to secure the future of the mobile giant. Vodacom Lesotho is the leading mobile communications operator in the country. It is a subsidiary of the Vodacom Group Limited, a South African mobile communications company, providing voice, messaging, data and converged services to over 55 million customers.

Vodacom Group holds an 80 percent stake in Vodacom Lesotho, with the remaining stake owned by Sekhametsi Investment Consortium, a conglomerate of local businesses. In February this year, the LCA made it public that it had given Vodacom a 90-day ultimatum to justify why it should be allowed to keep its licence after it “deliberately undermined compliance with the laws of Lesotho.” LCA is a statutory body, established in June 2000, with the mandate of regulating the communications sector in Lesotho.

The mandate entails, among others, promoting fair competition, approving tariffs and granting licences to operators. “The 90-days period that was given to Vodacom Lesotho to justify why its licence cannot be revoked has lapsed but the company made its submission within that stipulated period,” LCA Chief Executive Officer (CEO), ‘Mamarame Matela, said on Wednesday this week. Matela added: “Vodacom is one of companies offering essential services in the country and its licence cannot just be revoked abruptly.

“We are now in talks with the company trying to reach a mutually beneficial agreement, to ensure that it does not lose its licence.” She further promised LCA would update the nation as soon as the talks have been completed. On February 14, Public Eye exposed details of an explosive communique to the shareholders of Sekhametsi Investment Consortium, which revealed a widening rift between Vodacom and the LCA.

The communique revealed that in August 2019, LCA issued a non-compliance order against Vodacom alleging that the company had not complied with the payment of regulatory fees for the financial year 2018/2019. For this alleged non-compliance, Vodacom was, according to the directors of Sekhametsi, charged a penalty of M8.2 million. The communique further alleged that between August and December 2019, LCA targeted Vodacom in various press releases over radio and print media.

A few days later after Public Eye’s report, LCA announced it had hit Vodacom with a four-count indictment covering allegations ranging from failure to pay licence fees on time to failure to comply with tariff conditions. LCA’s statement was a damning portrait of Vodacom, which was revealed as a rogue operator which failed to comply with its own declared business rules and failed to hire an independent auditor. LCA said from as far back as 2015, “Vodacom directors and shareholders failed to appoint independent auditors as specified in Section 97(2)(g) in that the external auditor is a relative of the chairman of the board of Vodacom”.

Section 97(2)(g) of the Lesotho Companies Act, 2011 prohibits a company from appointing a person related to an officer (director) of a company in a position to influence financial transactions or financial statements of a company as its auditor. “The explanation provided by Vodacom Lesotho revealed a deliberate intention to undermine compliance with the laws of Lesotho,” LCA said. It said in the light of the seriousness of the matter, it requested Vodacom “to provide written reasons within 90 days why its Unified Licence cannot be revoked.”

The LCA statement also revealed that Vodacom failed to account for a M900 000 universal service fund allocated to it to provide internet in 150 high schools – 30 in 2016, 60 in 2017 and 60 in 2018. LCA said after it received complaints from some schools that did not receive internet as promised, it requested Vodacom to provide complete reports in relation to the service but Vodacom failed to do so. The mandate of the universal service fund is to ensure all citizens in the country have access to voice telephony services, internet access, broadcasting services and basic postal services.

The Communications Act requires anyone who receives funds from the Universal Service Fund to provide complete and accurate performance reports. LCA also accused Vodacom of “failure to pay licence fees on time” and “failure to meet Universal Service Fund obligations.” Vodacom said it was fully committed to addressing LCA concerns through the relevant forums “in due course.” On Wednesday, Matela revealed that Vodacom, this time together with its only competitor Econet Telecom Lesotho (ETL), had once again ignored LCA’s directive.

“Members of the public and the media will recall that, on 26 March 2020, the Authority announced that it has issued a directive to the two network operators, Econet Telecom Lesotho and Vodacom Lesotho, that they should implement mechanisms for stopping services for customers who had opted for in-bundle charging when such bundles get depleted unless there is a prior express consent from customers that they could be charged out-of-bundle rates,” she said.

She indicated that the directive was effective from April 20, and was to apply to data, voice and SMS bundles or “bundled services.” She said: “The Authority has since established that both networks have only complied to implement the directive in regard to data services. Customers have been provided with the means of opting in and out of bundled data using a variety of platforms.”

Matela further indicated that when LCA sought clarification from both Econet and Vodacom, they explained that they were not aware that the directive ordered that they must also stop charging from consumers’ airtime when voice bundles get depleted during a call. “It is on this basis that the Authority has given the network operators a period of a month beginning on June 9, to implement the directive in regard to voice and SMSs services,” she said.

In the meantime, she said LCA had put in place mechanisms to monitor the networks to ensure consumers were not charged their airtime or core balance upon depletion of their bundles. “Where members of the public believe they have been charged out-of-bundle when their bundles have expired or depleted, they are urged to contact their network providers to report such incidents. “However, if they are not satisfied with the response provided, they are encouraged to lodge complaints with the Authority,” she said.