NetOne gets 4-year lifeline

Published: 13 March 2014

THE Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) has revealed that NetOne's operating licence is not due for renewal this year, insisting the company still has three years on its current permit.

Market speculation was that the regulator was protecting NetOne by exempting the company from paying new licence fees pegged at $137,5 million.

This had created concern in the telecommunications sector, with industry players alleging preferential treatment by government of NetOne, whose licence they said had been clandestinely extended by two years to 2016 from 2014.

NetOne's licence was due for renewal around June but somehow, the licence was said to be due for renewal in 2016 "under unexplained circumstances". But in an interview with the Financial Gazette's Companies & Markets (C&M), POTRAZ director general, Alfred Marisa, said NetOne's licence was in fact due for renewal in 2017 and not 2016.

"NetOne's licence is due for renewal in 2017. Although NetOne started offering cellular mobile services in 1996, it was doing this as a department of the then PTC," said Marisa.

Last year, POTRAZ said Econet and Telecel licences had expired the same year, and indicated that NetOne's licence would be due for renewal mid this year. Some players in the industry said NetOne, the first mobile company to be registered in Zimbabwe but now the smallest of the three, got its 10-year licence in 1996. This meant that its licence expired in 2006.

Fingaz reported early this year that NetOne did not renew its licence but was allowed to operate until 2014 by POTRAZ, essentially getting an eight-year extension of its operating licence. It then emerged that with the new terms for a 20-year licence, government quietly gave NetOne, in which it is a 100 percent shareholder, a lifeline through an extension, which some industry commentators said could be illegal.

But Marisa said since NetOne had operated under the now defunct PTC until the enactment of the Postal and Telecommunications Act of 2000, which provided for the splitting of the PTC into three companies, namely TelOne, NetOne and Zimpost, it was not obliged to seek a licence to operate a mobile network business then.

"These successor companies were only licensed after they were duly formed as companies in terms of the Companies Act," said Marisa. He further said the law only provided for the licensing of companies, not departments within companies.

"Their licences could therefore not be backdated to the time when the PTC was formed or to when they started offering services as departments within the PTC," said Marisa.

Econet Wireless, the country's largest mobile telecommunications network by subscribers, was last year forced to fork out $137,5 million for the new 20-year licence, a once-off, non-tax collection that significantly narrowed the budget deficit last year.

An additional $8 million had been raised from other operators, bringing the total revenue from licencing fees from mobile telecommunications companies to $145,5 million.

Rival, Telecel Zimbabwe, has not paid for its licence in terms of an agreement struck with POTRAZ. Officials at the company said its first installment to POTRAZ for the licence was held by a local bank which was going through a liquidity crunch. But Telecel has apparently not explained if they had taken any action against the bank. Telecel said its next installment for licence is due in December this year and "was geared to meet this obligation as per the agreed payment plan with government".

The company said it entered into negotiations which resulted in an agreement with POTRAZ together with the then parent Ministry of Transport and Communications and the Ministry of Finance to pay the licence fee over an agreed period with a deposit of $14 million.

"Our records at hand will confirm that instructions to pay the deposit were immediately processed through our banks," said Telecel, who blame problems at one of their bankers Metbank and an unidentified source.

"Both banks have confirmed to both regulatory and Ministry officials the obligation they have to Telecel to meet this commitment," said Telecel.
- fingaz

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