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Vodacom in limbo over Lesotho licence, hefty fine

By Chris Tredger, ITWeb Africa editor.
Johannesburg, 18 Feb 2021

Vodacom is still eagerly awaiting for the judgement over a hefty fine imposed on it, as well as the revoking of its licence in Lesotho.

This, after the company last year clashed with authorities in that country for “failure to comply with the directive to pay a penalty of R40.2 million by 7 October 2020”.

In October, the telco scored a first round victory over the Lesotho Communications Authority (LCA), which was seeking to revoke the company's unified licence.

The company had challenged the “lawfulness of this decision” to revoke its licence and got a temporary reprieve.

In a statement issued to ITWeb, Vodacom Lesotho says: “Having been granted an urgent interdict by the High Court of Lesotho, Vodacom Lesotho is awaiting judgement regarding the Lesotho Communications Authority’s decision to impose a staggering M134 million fine and to revoke the company’s unified licence.

“We have also launched an application to have reviewed and set aside the LSA’s directive seeking to confer on the LCA the power to approve the appointment of directors, officers, senior officials and auditors of companies holding unified licences in the communications sector.

“Vodacom Lesotho continues to be committed to in-country regulatory compliance and to achieving the highest standards of corporate governance and citizenship by adhering to all applicable laws in Lesotho. We remain focused on delivering great value and a superior customer experience to the 1.2 million citizens of Lesotho who have chosen us as their network provider of choice and the more than 600 000 M-Pesa users who rely on us for inclusive access to financial services.”

Murder mystery

The LCA will not comment on claims its current legal battle with Vodacom Lesotho stems from the telco’s reported assistance in a murder investigation in February 2020.

The regulator did not want to be drawn into discussion over whether the situation with the market’s dominant operator is linked to the investigation which made headlines at the time and involved the then prime minister Thomas Thabane.

Media covered the story, including the R8 million fine imposed on Vodacom Lesotho for alleged failure to deliver on legal obligations.

ITWeb reported last year that: “The communications authority claims Vodacom failed to pay regulatory fees due at the beginning of July 2019. The LCA also says the operator failed to meet Universal Services Fund obligations in the mountain kingdom. Furthermore, it alleges Vodacom failed to appoint an independent auditor as stipulated by the LCA.”

The authority had issued a statement: “On 2 August 2019, Lesotho Communications Authority issued a penalty of M8.2 million (R8.2 million) against Vodacom Lesotho for failure to pay regulatory fees as they fell due and payable on or by 1 July 2019.

“The Lesotho Communications Authority (Licensing Classification and Fees) Rules 2018 prescribe on clear terms that the authority shall impose penalties for non-payment of regulatory fees and prescribes how these penalties shall be imposed.”

In February last year, the LCA also claimed to have paid R900 000 to Vodacom Lesotho to provide Internet to high schools between 2016 and 2019, but said the operator had not followed through on this.

ITWeb is awaiting further clarification and response from the LCA regarding this matter.

Opening up the market

In a recent interview with ITWeb Africa, Mamarame Matela, CEO of the LCA, stressed the regulator’s determination to execute a fresh mandate to open up its telecommunications market, usher in competition and digitise the economy.

“The Lesotho government has prioritised moving the country towards a digital economy and a fully digital future. As a regulatory authority, I fully support this and believe that although Lesotho may be considered a small market, there is room for a variety of service providers who want to be part of Lesotho’s digital future,” said Matela.

She explained that since its establishment in 2000, the LCA operated a licensing regime that maintained a closed market for unified licences, which allowed only two unified licensees within the market and limited the free entry of other competitors unless invited by the LCA.

“From a legislative perspective, we have promulgated amendments to Rule 3(2) of the Lesotho Communications Authority (Administrative) Rules, 2016, by removing the requirement for application by prior invitation, to application for all licences on a first come, first served basis.”

Matela added that one of its key challenges is oversight, with the current self-declaratory system proven to be ineffective.

“The LCA is heavily reliant on operators to provide accurate and authentic information about sector performance without independent assurance tools to monitor compliance. The current self-declaratory system has proven to be ineffective as we have experienced over the years with the current telecom operators.

“The self-declaratory system also negatively impacts consumers. We have seen discrepancies in the billing of some products, charging of calls by customers to toll-free numbers and overcharging resulting from treatments of per minute or per second billing, amongst others.”

According to Matela, without the technical capability or mechanism to monitor compliance, as well as access to real-time data that provides accurate information, the LCA is limited in its ability to meet its competition management and consumer protection mandate.

“For these reasons, the LCA is in the process of implementing a system to monitor national and international telecommunications traffic. The system will help increase revenue assurance, combat network fraud and enforce billing integrity across all communication networks available in Lesotho. This technology provides the LCA with real-time accurate telecom metrics for tax collection purposes, it also gives the LCA the ability to detect fraud and issues relating to licensing compliance.”

At odds with regulators

Commenting on the ongoing situation, Sabelo Dlamini, senior research and consulting manager at IDC Sub-Saharan Africa, says: “We have seen a similar case with MTN in Nigeria, where South African operators struggle with the regulators.

"These issues in most cases boil down to individuals representing the organisation, but in this case, we are hoping the courts will be able to help settle this matter, and both Vodacom and LCA accept the outcomes.

“As both organisations are demonstrating their powers, it will negatively impact the country, as Vodacom will now need to think twice about its investments in the country.

"While on the other hand, the regulator is looking at options of having another operator to avoid the market being controlled by a single operator, but a country of the size of Lesotho needs at most two well-regulated operators."