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Vodacom, LCA reach M4 million settlement

Lesotho's widely read newspaper, published every Thursday and distributed throughout the country and in some parts of South Africa.

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Mohalenyane Phakela

VODACOM Lesotho and the Lesotho Communications Authority (LCA) have finally agreed an out court of settlement to their long-running legal battle wherein the authority sought to revoke the mobile communications giant’s operating licence.

In terms of the settlement reached this week, Vodacom will pay the LCA M4 million. Half of that amount is due by 30 November 2022 latest, with the remainder to be paid over two years. Explaining the issue in an interview yesterday, Advocate Christopher Lephuthing, who represented the LCA, said the M4 million was for the settlement of the dispute, not necessarily a fine or admission of guilt by Vodacom.

This is way below the staggering M134 million which the LCA had fined the mobile communications giant in 2020 for what it said were serious infractions since 2015 including “submitting audited financial statements that were unaccompanied by a certification issued by an independent external auditor”.

At the time, Vodacom was ordered to immediately pay M40, 2 million, representing 30 percent of the entire fine imposed on it. The remaining M93, 8 million (70 percent) was suspended for five years on condition that Vodacom does not commit further offences in contravention of its regulatory obligations within that period.

The fine ought to have been paid on 7 October 2020. When it was not paid, the LCA decided to revoke Vodacom’s operating licence the following day.

This prompted Vodacom to file an urgent High Court application for an interim order nullifying the revocation. The interim order was duly granted by the now late Justice Thamsanqa Nomngcongo paving the way for Vodacom to continue providing services pending the finalisation of its application for a final order against the LCA decision.

The chairman of the board of LCA, the LCA and the LCA chief executive officer were the first to third respondents respectively in the application.

In terms of the final reliefs, Vodacom wanted the court to nullify the LCA’s decision to revoke its licence and to fine it M134 million.

It also wanted the court to declare as unlawful, the LCA’s decision to include M-Pesa revenues as part of telecommunications revenue when calculating the regulatory fees Vodacom is expected to pay for its mobile communications licence.

Judge Keketso Moahloli heard arguments from both LCA and Vodacom’s lawyers to finality on 6 December 2020 and reserved judgement to an unspecified date, saying he first needed to consider all the submissions which had been made.

Last month, Justice Moahloli had said he would deliver his verdict on 24 October 2022. However, that did not happen after both sides’ lawyers indicated that they were negotiating an out of court settlement.

Adv Motiea Teele represented Vodacom while Adv Lephuthing was the LCA lawyer.

“It is ordered that the following decisions and determinations made by the second respondent (LCA) are reviewed and set aside:

The order further states that, “the applicant (Vodacom) is ordered to make a payment of M4 million to the second respondent (LCA) over a period of two years calculable from the date of the order; and M2 million of the amount referred to above is payable within 30 days of this order”.

The settlement brings to an end the long-running saga which had threatened to paralyse the mobile communications and mobile money sectors as Vodacom commands the market share in both.

Although both lawyers would not be drawn into revealing any details, sources close to the developments have told the Lesotho Times that the LCA, now under acting CEO, Nizam Goolam, agreed to withdraw the hefty fine imposed on Vodacom because they considered it to be excessive. It is said they also agreed that shutting down Vodacom would paralyse the country as it commands the market share in the mobile communications industry with at least 1, 2 million customers.

Vodacom states that it commands 88 percent of the market share in the mobile money space and transacts over M1 billion per month.

The sources said LCA had also agreed to withdraw regulations imposed by former CEO, Mamarame Matela, requiring mobile communications companies and other licensees to submit names of prospective senior officials for vetting before they are appointed or before their contracts are renewed.

Ms Matela’s contract was not renewed when it expired on 31 March this year. The government had suspended her last year for alleged corruption in the awarding of a M500 million tender to to Global Voice Group (GVG) South Africa for the supply of a Compliance Monitoring and Revenue Assurance system.

The system would enable the LCA to actively spy on citizens’ private communications on their mobile phones. It would also enable the LCA to monitor citizens’ financial transactions conducted through their mobile phones.

The government is challenging the tender award. Ms Matela has vehemently denied corruption allegations in the award of the tender.

Instead, she has accused former Communications, Science and Technology Minister, Keketso Sello, of refusing to promulgate the regulations until he was given a M3 million bribe by GVG. She said the former minister also demanded to have his company subcontracted by GVG before he could approve the tender.

She also accused Mr Sello of demanding sexual favours from her as a condition for keeping her job. She even reported the sexual harassment claims to former Prime Minister Moeketsi Majoro who has to date remained tight-lipped over the issue. She subsequently reported the matter to the police who said they completed their investigations last year and submitted the docket to the Director of Public Prosecutions (DPP), Hlalefang Motinyane.

After initially suspending her, the government then sent Ms Matela on forced leave pending the expiry of her contract on 31 March 2022. It was not renewed when it expired. Ms Matela has since joined politics as deputy leader of the Teboho Mojapela-led Socialist Revolutionaries (SR). She was sworn in as a non-constituency legislator under the proportional representation (PR) system.