Vodacom Lesotho on the brink with regulator over $8m fine

Vodacom’s Lesotho unit on the brink with regulator over $8m fine

18 February 2021 | Alan Burkitt-Gray

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The regulator in Lesotho in south-eastern Africa is in the middle of a battle with the country’s biggest operator, an offshoot of South Africa’s Vodacom.

Mamarame Matela (pictured), head of the Lesotho Communications Authority (LCA), is challenging Vodacom’s local operation, and has fined the company US$8.1 million, though Vodacom has refused to pay so far.

The fine was because the LCA is saying that Vodacom Lesotho has poor corporate governance, alleging that its audit firm is associated with the sister-in-law of the company’s chairman, Matjato Moteane. Vodacom is denying that this is a conflict of interest.

Vodacom has 85% of the country’s mobile market, so she is reluctant to cancel its licence to operate and cut off so many customers. According to Matela, the telecoms operator is almost holding the country hostage because it controls 85% of the market share.

So she has taken to the press. This week she gave an interview to the local newspaper, the Daily Maverick 168, picked up by the Ecofin news agency.

She told the newspaper: “It is always possible to negotiate with the regulators to reduce the fine. But we were never approached by Vodacom. Instead, there is now a legal process that I am not sure will give Vodacom the result it needs.”

Ecofin says that Vodacom Lesotho has remained silent in the face of reminders from the regulator. Vodacom has always acted out of “pride”, said the regulator.

The main competitor in Lesotho, which has a population of 2.1 million, is Zimbabwe-based Econet, part of the same group that owns Liquid Telecom.

Matela told South African newpaper Daily Maverick 168: “The fine is still outstanding. There are ongoing and out-of-court discussions with Vodacom on how to resolve the matter. The LCA is amenable to those discussions and finding solutions around the company’s compliance with governance standards.”

She said her biggest concern was that Vodacom Lesotho was “saying to the Lesotho government, ‘tell your telecommunications regulator to back off and if it doesn’t, we will close our operations’. The other mobile network operator can’t carry Vodacom’s capacity. In a sense, Vodacom is almost holding us to ransom.”

That’s why, she said, “the regulator initially decided that a licence revocation would not necessarily be right, but a fine would be appropriate. The dispute shows the problem with Vodacom’s market dominance. A licence revocation presents a national security risk.”

The entire government depends on Vodacom for communication services, she said.

Matela insisted: “We wouldn’t want to lose Vodacom. Vodacom is a good performer in Lesotho. But just because you are a good performer, it doesn’t give you the licence to flout the rules. We hope that we will be able to reach a settlement arrangement with Vodacom and save their operating licence.”

The ideal outcome “would be to settle the fine”, she said.