(MENAFN- The Post) MASERU -''WE continue to face increasing regulatory and policy challenges across our markets, with implications for revenue growth, product pricing, and cost efficiency.''
That statement is in the 2020 annual report for Vodacom, the Johannesburg Stock Exchange-listed company that owns 80 percent of Vodacom Lesotho.
Vodacom was not saying anything new.
It was telling the story of its regulatory and policy challenges in other markets like South Africa Kenya, Tanzania, the DRC, Mozambique, Lesotho and Kenya.
Such problems are common in a highly regulated sector that has become increasingly powerful because of it''s economic, political and social spheres.
It doesn''t help that mobile companies use spectrum, a public asset, as the basis of their business. It is therefore not surprising that regulators are putting mobile network operators under a magnifying glass of sorts. Sternly worded letters are not uncommon. Fines are a routine.
But rarely do matters escalate to the point of the regulator threatening to revoke a licence.
That is why telecommunications companies in Lesotho were spooked when the LCA threatened to cancel Vodacom Lesotho''s licence in February this year.
Vodacom Lesotho quickly cobbled together a response some two weeks later.
That was the beginning of a back and forth that has now ended with the company being slapped with an eye-watering M134 million fine.
Vodacom first responded on March 18, insisting it had not contravened the Companies Act by appointing a relative of the chairman as an external auditor.
The company said the proposal to revoke the licence was extreme and inappropriate based on the impact for Lesotho and SADC. It said it had been an exemplary corporate citizen.
''Mamarame Matela, the LCA boss, then told the company that its explanations were inadequate.
On May 11 Vodacom wrote another letter making various commitments that the LCA again rejected on account that they were not supported by evidence.
That was followed by a third letter on May 15 in which Vodacom Lesotho implored the regulator to reconsider the potential implications of revoking the licence.
The company said it has contributed more than M1 billion in taxes since 1996, created employment for 23 000 people and spent M2.2 billion on the network infrastructure.
It said the decision would affect its 1.2 million subscribers and 500 000 Mpesa customers.
The company also said the decision would dent investor confidence in Lesotho.
Vodacom Lesotho also mentioned its corporate social investment projects to which it said it has given M85 million. Matela however said there is no evidence to support all these assertions.
A look at Vodacom Lesotho''s financials however shows that the company does play a significant role in Lesotho''s economy. Valued at around M3.5 billion the company is worth about 17 percent of the country''s budget for this year.
Last year it paid more than M300 million in taxes. It employs some 220 people with at least 1 500 dependents.
For the financial year ending March 2020 Vodacom Lesotho had 1.6 million active subscribers and 800 000 Mpesa customers.
In the same period, it made M1.377 billion in revenues and had a profit before tax of just over M600 million.
Beyond direct jobs and contributions to the fiscus, Vodacom Lesotho supports several other indirect jobs and enables millions of financial transactions through its mobile network.
Perhaps the biggest beneficiaries are Basotho who own shares in Vodacom through Sekhametsi Consortium.
The consortium owns 20 percent of Vodacom Lesotho and has consistently received dividends for that investment.
Sekhametsi values that 20 percent at M800 million.
Last year the consortium received just under M50 million in dividends.
Those dividends might however not come this year because of the fine. By some estimates, the investment in Vodacom contributes nearly 60 percent to Sekhametsi''s revenues.
Staff Reporter
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