Lesotho Takes Aim at Smartphone Giant

cellphone

It's a multi-billion dollar industry which has seen millions of Africans connecting with each other and the rest of the world. And international telecom companies view the continent as fertile marketing territory.

However, Legalbrief reports that Lesotho has become the latest African nation to serve notice that it won't tolerate foreign players allegedly violating its governance rules.

The move by the Lesotho Communication Authority (LCA) comes five years after the Nigerian subsidiary of MTN was fined $3.2bn by the Nigerian Communications Commission (NCC) for partial compliance of regulatory guidelines. In an earlier case, Turkey's Turkcell filed a $4.2bn lawsuit in Washington DC in 2012 alleging the company used bribery to win a mobile licence in Iran that was first awarded to Turkcell.

Vodacom Lesotho has expressed its shock after the kingdom's telecom regulator revoked its operating licence last week. The LCA said the company failed to pay a fine of more than R40m. It accused Vodacom Lesotho of breaking governance rules by appointing an auditing firm associated with the sister-in-law of its chairperson, Matjato Moteane, to audit its accounts.

Business Insider reports that the telecoms giant has now lodged an urgent application in the High Court, saying the move is 'both erroneous as a matter of law and public policy'.

' Given the hostility shown by the LCA towards Vodacom, our options are now limited to seeking redress in the courts to avert further damage to our brand, reputation and the interests of stakeholders, including our customers, shareholders and employees,' said Vodacom Lesotho managing director Philip Amoateng.

The country's biggest mobile phone operator brings in more than R600m to its parent's annual core earnings of almost R38bn. Full Business Insider report

The Post, a Maseru publication, notes that the fine 'appears to' have the blessing of the country's Cabinet and its Communications Ministry.

It reported that LCA CEO Mamarame Matela instructed Vodacom Lesotho, in a letter dated 28 September, to pay the equivalent of R40.2m of the fine in local currency, with the remaining amount suspended for five years, provided the company 'does not commit any further contraventions of its regulatory obligations during the said period'.

Moneyweb reports that Lesotho is by far Vodacom Group's smallest operation. However, the group said that since Vodacom Lesotho launched in 1996, the company has made 'significant contributions to the fiscus, helped bridge the digital divide and introduced programmes that have benefited many of the country's citizens'. Full Moneyweb report

In terms of this weekend's court order, the regulator must now show why the interim order should not be made a final order of the court. The LCA has until 23 October to make its argument.

Business Day reports that Vodacom spokesperson Byron Kennedy said the company remained 'fully focused on delivering great value and a superior customer experience to the 1.2m people who have chosen us as their network provider of choice and the about 661 000 M-Pesa users who rely on us for inclusive access to financial services'.

The country's biggest mobile phone operator brings in more than R600m to its parent's annual core earnings of almost R38bn. Full Business Day report (subscription needed)

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