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Lesotho’s Communications Authority flexes muscle over Vodacom spat

Mamarame Matela, CEO, the LCA.
Mamarame Matela, CEO, the LCA.

The ongoing legal tussle between the Lesotho Communications Authority (LCA) and mobile network operator Vodacom Lesotho looks likely to continue as both parties remain determined to stand their ground.

In October 2020, the regulator revoked Vodacom’s operating licence and ordered the company to pay R134-million in fines.

Subsequently, after heading to court, the operator had the licence revocation and fine suspended.

Vodacom Lesotho issued a statement which read: "We assure citizens of Lesotho that we remain fully focussed on delivering great value and a superior customer experience to the 1.2 million people who have chosen us as their network provider of choice and the around 661 000 M-Pesa users who rely on us for inclusive access to financial services. It remains business as usual for all our valued customers."

According to telecommunications specialist and independent author Suzette Plantema had the court ruled against Vodacom, 1.2 million subscribers and 661,000 M-Pesa users would have been adversely affected.

In November 2020, Plantema wrote: “The conflict would have been averted had a compliance monitoring system been in place. Such a solution would enable both operators and the regulator to optimise revenues, while ensuring greater inclusion and market growth in Lesotho’s telecom sector. According to the Digital 2020 report by Datareportal, there were 946,000 internet users in Lesotho in January 2020, while internet penetration stood at 44%. There were 2.3 million mobile connections in the same period. The number of mobile connections was equivalent to 108% of the total population. Despite growth in connectivity, the kingdom has poor cyber security and inadequate legislation, hence inability to reap dividends of a digital economy.”

Not the end of the road

The LCA said this is not the end of the road and while it is currently working towards an amicable solution, it is adamant that operators adhere to international best practices – particularly in audit reporting and safeguarding the independence of assurance functions.

In an interview with ITWeb Africa, Mamarame Matela, CEO of the LCA said: “As the LCA we understand that technology and communication services are so infused in our daily lives, and Vodacom Lesotho plays an important role as a mobile operator that is increasingly expanding into the financial services sector. However, companies who want to operate in Lesotho must understand, that although Lesotho is a small country, as a regulatory authority we expect international best practices to be adhered to, particularly in audit reporting and safeguarding the independence of assurance functions. The LCA expects the same level of compliance and reporting seen with listed companies on the JSE, LSE and other international stock exchanges.”

According to the regulator Lesotho’s telecommunications market is highly concentrated, with Vodacom Lesotho dominating the bulk of the mobile market and Econet Liquid dominating various segments of the fixed market.

A study commissioned by the LCA and ITU shows that current prices, even relatively well-benchmarked data prices, are unaffordable for many Basotho.

“The impact is that digital inequality is increasing as an urban elite benefit from being online. At the same time, most of the population are left offline, or only able to be online intermittently and for short periods due to the relatively high cost of communications for them. Added to this, and because the sector is a duopoly, competition is insufficient to promote effective price reductions for consumers. Therefore mobile penetration remains below the regional average, and the small size of the market provides little incentive for new players to enter the market,” stated the LCA.

Room for providers

Matela told ITWeb Africa that the country’s government has prioritised movement towards a digital economy and although the market may be considered small, there is room for a variety of service providers.

“Since its establishment in 2000, the LCA operated a licensing regime that maintained a closed market for unified licenses, 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 licenses on a first-come first-served basis. The impact of these Rules makes the market more accessible in that any prospective applicant can submit an application that meets the prescribed requirements together with payment of application fees to obtain a unified license and operate in Lesotho.”

But there are challenges. Matela said aside from having to balance the interests of three sectors: telecommunications, postal services and broadcasting, a key challenge is oversight.

“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,” she said.

Matela explained that 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 licencing compliance. Overall this technology will ensure that Lesotho achieves greater digital inclusion, and the creation of a fair and competitive telecom market that offers consumers affordable quality services and products.”

COVID-19 impact

Matela added that amid the pandemic, network operators moved swiftly to invest in improving network capacity in residential areas in order to adjust to shifting traffic patterns.

“The telecom market remained resilient with an average increase of approximately 13% in mobile broadband subscriptions. Traffic volumes increased,” she added.

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