Business

Swaziland's phone wars spark crisis

Louise Redvers

The long-running row between MTN Swaziland and the country's telecommunications operator has grown into what's been dubbed a "constitutional crisis".

As the only cellular operator in Swaziland, MTN stands accused of defending its monopoly unfairly and having high-ranking officials among its shareholders. (Oupa Nkosi, M&G)

This follows a vote of no confidence in the Cabinet by members of Parliament.

MTN Swaziland, whose shareholders are widely reported to include King Mswati III and Prime Minister Barnabas Sibusiso Dlamini, has won a legal battle against the Swaziland Posts and Telecommunications Corporation over its roll-out of internet dongles and cellphones.

The International Court of Arbitration backed an earlier high court ruling that the corporation had violated a joint venture agreement with MTN Swaziland, in which it holds a 41% stake, and the country's executive reacted by switching off its services. This has left thousands of Swazis with cellphones and dongles that no longer work and has sparked an outcry against MTN Swaziland, which has been accused of defending its monopoly at the expense of the Swazis.

Parliament, whose members had urged the executive not to cut the connection to the corporation, last week passed a vote of no confidence in the Cabinet for going ahead with the termination.

According to the Constitution – which is facing its sternest test since its creation in 2005 – the prime minister must resign within three days of the motion, or the king must dissolve the government. However, more than a week after the parliamentary vote, Mswati has yet to make a declaration and the prime minister has stated outright that he does not acknowledge the motion.

"We will just ignore the vote of no confidence and carry on with our business as usual," the Times of Swaziland reported him as saying.

Null and void
Attorney General Majahenkhaba Dlamini has declared the parliamentary vote "null and void" because the decision to close the corporation's services had not been taken by the Cabinet, but by a court of law.

And Brigadier Fonono Dube, a commander of the country's army, the Umbutfo Swaziland Defence Force, told local media that the Constitution was worthless anyway because it had not been formally presented to the United Nations.

While Swazis wait to see what happens, business leaders and civil society activists are backing calls for the Cabinet to resign, accusing ministers of violating the Constitution and undermining the rule of law by refusing to acknowledge the motion.

Musa Hlophe, who heads the Swaziland Coalition of Concerned Civic Organisations, said it was clear that the government "had lost the mandate of its people" and called on ministers to step down.

"The prime minister and the Cabinet now have a clear choice," he said. "They can do the honourable thing and show the world that Swaziland is a constitutional democracy by resigning. If they cling to their positions, they will further dishonour the international reputation of Swaziland by telling the world that our Constitution is a lie."

The Federation of the Swazi Business Community's Henry "Tum" du Pont said business backed the ­resignation call, which echoed popular sentiment.

"This Cabinet has no mandate to govern, is not fit for purpose and it must do the honourable thing and go immediately before it damages Swaziland any further."

Du Pont said the decision to block the corporation's services had impacted negatively on local businesses that were already struggling. "The introduction of these new services brought real competition into the telecommunications sector," he said. "This enabled ordinary people to begin to afford to communicate more and the business community to access new markets and improve their services, competitiveness and profitability. As one of the poorest countries in the Southern African Development Community region, we had long suffered from monopoly pricing and were charged the highest rates for [communications] services."


Complex shareholding web drives an impossible bargain

MTN Swaziland was established in 1998 through a partnership with the Swaziland Posts and Telecommunications Corporation and for more than a decade held a monopoly on cellphone services.

The high cost of calls resulting from that monopoly prompted appeals from agencies such as the International Monetary Fund to open the market to competition and bring down prices. The corporation attempted to do just that, but has been blocked in its efforts by MTN Swaziland, which is unhappy about giving up its market share.

The issue is muddied by the complicated shareholding structures of the two firms.

The corporation holds a 41% stake in MTN Swaziland, which is partly owned by King Mswati III, who has a 10% share, and the private consortium Swaziland Empowerment Limited holds 19%. The consortium’s shareholders include Prime Minister Barnabas Sibusiso Dlamini, who is constitutionally the head of the government, although he is subordinate to the king.

In 2009 the corporation tried to sell its stake in MTN Swaziland to get out of a joint venture agreement that prevented it from launching competitive devices. But this was blocked by the Cabinet, a move reported at the time as having been driven personally by Mswati.

The corporation’s managing director, Nathi Dlamini, did not have his contract renewed once it came to an end, and he now faces corruption charges in the high court, allegedly relating to a dispute about whether authorisation was properly obtained for the establishment of a subsidiary company of the Swaziland Posts and Telecommunications Corporation.

The corporation pressed on with its plans for its new-generation mobile network, but in 2010 MTN Swaziland launched legal action to stop the roll-out.

The high court ruled in the corporation’s favour, but the finding was reversed on appeal by the country’s supreme court. Earlier this year, a ruling by the International Court of Arbitration ordered the parastatal to shut down its mobile network.

According to local media reports, millions of rand had already been invested by the telecoms parastatal in rolling out the new mobile phone and internet services that were set to rival existing MTN products.

Up to 250 jobs could be lost at the corporation as a result of the switch-off and it is also expected to pay a settlement to MTN Swaziland of about R30-million. – Louise Redvers

<em>An earlier version of this story reported that Nathi Dlamini was fired from his post as managing director of the Swaziland Posts and Telecommunications Corporation (SPTC). The newspaper accepts Mr Dlamini's account that he was not dismissed but served his contract to completion, and regrets the error. The report also said he was facing corruption charges allegedly in relation to tenders he oversaw during his time in office. In clarification, the newspaper would like to add that these charges, under Swaziland's Prevention of Corruption Act, relate to a dispute about whether authorisation was properly obtained for the establishment of a subsidiary company of the SPTC.</em>

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