Zimbabwe firms in bitter fee dispute
An explosive telecommunications battle between Zimbabwe's biggest mobile operator, Econet, and state-run telecommunications company NetOne has partly been resolved after the two companies agreed to a draft consent order forcing Econet to reconnect with NetOne within five days after cutting interconnection for two days.
Econet, founded by businessperson Strive Masiyiwa, is the biggest telecommunications operator in Zimbabwe and has 6.4-million subscribers. It is aiming to boost its network users to 10-million following the shipment of network equipment likely to take its investments in the country to $1-billion. NetOne has about 1.5-million subscribers and claims to have the widest coverage in the country.
Econet and NetOne are not new to disputes: the two operators refuse to share telecoms infrastructure such as towers for base stations, as the regulator demands.
In 2006, Econet was forced out of sponsoring the Zimbabwean Premier Soccer League after NetOne made a sponsorship deal with one of the league's top clubs.
However, the latest dispute over call-termination fees has attracted the glare of the public, the government and other stakeholders and put the Postal and Telecommunications Regulatory Authority of Zimbabwe under close scrutiny amid claims by informed sources that the regulator lacks the capacity to deal with such disputes.
Informed insiders privy to the developments told the Mail & Guardian that the struggle between the two companies was far from over amid claims that NetOne was hiding behind its biggest shareholder, the government.
"The consent order reached on Monday brings no immediate end to this dispute, because the disputed $20-million Econet says it is owed has not yet been agreed on," said an informed source.
NetOne is disputing that it owes Econet $20-million in call-termination fees and has threatened to have Econet executives arrested for terminating interconnection services between the two companies, saying this violated telecommunications laws and constituted an act of economic sabotage.
Econet has been roundly criticised for cutting off connectivity between its subscribers and those on NetOne's network.
"Simply disconnecting members of the public without warning is irresponsible. Members of the public are busy going about their business and then they are suddenly disconnected," said high court Judge Ben Hlatshwayo this week.
The criticism came after Econet, which last week agreed to reconnect with NetOne because the dispute was now before the high court, cut off cross-network calls with NetOne a few hours before the hearing on the dispute resumed on Monday.
Econet initially cut interconnection with NetOne last Thursday, citing non-payment of the outstanding fees.
"There are so many issues at play and the other factor to consider is that the communications minister still has to make a determination on the concerns raised by NetOne that led to the suspension of interconnection negotiations by the regulator," said an informed source.
NetOne said it had appealed to the minister, Nicholas Goche, to make a determination on the effect of the abrupt dollarisation of the Zimbabwean economy, which had placed undue obligation on the state-run company because it had become cheaper to make calls from NetOne to Econet. This allowed subscribers to take advantage of the situation.
It also complained to Goche about unfair practices by Econet, which is said to have transferred its post-paid subscribers to a prepaid platform, resulting in high traffic from NetOne to Econet.
Goche has not yet decided the matter, leading to the 2006 interconnection agreement not being renewed. Subsequently, the regulator suspended interconnection-agreement negotiations.
The regulator's director general, Charles Sibanda, has said that the two companies should approach the organisation to settle interconnection disputes. However, Econet said in a separate statement that it had lobbied the regulator, the finance ministry and the communications ministry, among other authorities, to recover the "outstanding" call termination fees.
A number of officials and other informed sources expressed concern about the regulator's lack of sincerity in finding a solution to the dispute, which sources said had been in the making for a long time.
It is normal practice in other countries for telecommunications companies to interconnect to one another. It is usually done under an agreement that sets out a mutually agreed cost for the termination of calls between the operators.
Other telecommunication companies involved in the dispute over call-termination arrears are the state-run fixed-line operator TelOne and the third mobile operator, Telecel.
"These rates are 7c per minute for a domestic call and 20c per minute for international calls," said Econet in an earlier statement. It stated that "NetOne has failed to remit the monthly fees due to Econet" and "the failure to pass on an amount collected from its subscribers is not only irresponsible, but also borders on dishonesty to Econet and NetOne subscribers".
"The regulatory authority is treating NetOne with kid gloves and it will be difficult to see it taking any stern action against it. But Econet is also not doing its homework properly, for how do you disconnect services and inconvenience subscribers and lose potential revenue in the process," said an executive in the telecommunications sector.
Econet could find itself in trouble for terminating interconnection with NetOne when the matter was about to be heard in the high court.
The dispute between the two companies is so bitter that accusations and counteraccusations have been flying all week. Advocate Ray Goba, who represents NetOne, accused Econet of behaving like "a bull in a china shop".
Advocate Firoz Girach, who represents Econet, responded to this by saying: "If you want to engage in commerce, you must pay for what you get. Tell us how you are going to pay. It is not a bullying tactic to say 'pay me my money'."
Addmore Chakurira, a leading analyst at Imara Africa Securities Zimbabwe, said Econet would not lose revenue should the situation culminate in the disconnection of services between the two companies, although this was unlikely, given its higher subscriber base.
"Econet traffic comprises about 80% of the total. The non-payment of interconnect fees has had a negative impact on Econet's cashflow and Econet is owed in excess of $85-million by the other operators," he said.
Gladys Mujuru, an ICT research analyst at Frost & Sullivan, said Zimbabwe's telecommunications sector was "quite vibrant".
She said the legalisation of voice over internet protocol (VoIP) services, however, had introduced some urgency for mobile operators to expand and defend their voice revenues.
But VoIP telephony services, offered mostly through CDMA infrastructure, had "not had a huge impact on traditional mobile service providers' market share", Mujuru said.
This sets the stage for an intense battle for control of the market and this latest dispute between Econet and NetOne is likely to benefit competitor Telecel, which has about 1.6-million subscribers on its network.