THE Lesotho Communications Authority (LCA)’s chief executive officer, ‘Mamarame Matela, has defended its decision to fine Vodacom Lesotho an unprecedented M134 million, saying the mobile communications behemoth was a “serial offender” that had “repeatedly violated” its licensing terms for several years.
Last week, the LCA sent shockwaves in the telecommunications sector and in the business sector in general by fining Vodacom the staggering amount.
In fact, the LCA wanted to cancel Vodacom’s operating licence and was only prevented from doing so and opting for the fine by the Central bank of Lesotho (CBL) and other key institutions who warned of the deleterious effects on the economy the decision would have.
In her nine-page letter to Vodacom’s managing director, Philip Amoateng, Ms Matela said the fine was for various infractions committed since 2015 including “submitting audited financial statements that were unaccompanied by a certification issued by an independent external auditor”.
She also accused Vodacom of unethical practices by allegedly hiring an audit form headed by the sister-in-law to the chairperson, Matjato Moteane.
In the LCA’s view, this meant the audit firm could not be independent and its assessments of the company would be compromised.
Vodacom was ordered to immediately pay M40, 2 million or 30 percent of the fine. The remaining M93, 8 million (70 percent) of the fine was suspended for five years on condition that Vodacom did not commit further offences in contravention of its regulatory obligations within the period.
Ms Matela this week repeated the allegations against Vodacom at a media briefing at the LCA offices.
LCA board chairperson Motanyane Makara, and other board members, Keneuoe Mohale, Karabo Maitin Lehutso and Phakiso Molise were all in attendance.
“They (Vodacom) failed to appoint an independent auditor from as far back as 2015 to 2019,” Ms Matela said, adding Vodacom had since appointed new auditors for their 2019/20 financial year.
“They also failed to provide adequate mitigating factors and supporting evidence as to why their licence should not be revoked.”
She said Vodacom also denied the authority access to its operational records. Ms Matela said the LCA was not provided with the actual names of the individuals who conducted Vodacom’s audit. Instead, the company only provided the name of the audit firm sparking fears of concealment of financial irregularities.
She said Vodacom also “dishonestly and knowingly” filed a M9, 2 million invoice to the LCA for work that it had failed to complete.
She also accused Vodacom of “unethically divulging” its problems with the LCA to the media and attempting to get high-ranking politicians to mediate on its behalf.
“It is not that we have problems with Vodacom only. We have problems will all our licensees, be it radio stations, the Lesotho National Broadcasting Service (LNBS) but you will not always know about them because they are normally resolved around the table rather than by discussing them in the media.
“There was also a heavy level of political interference that Vodacom engaged in. They also failed to comply with a directive on out of bundle charges for mobile services that the authority had issued. They only complied in September 2020,” Ms Matela said.
She said the infractions were so serious and Vodacom had “failed” to show any remorse that the authority considered cancelling its licence.
She said the LCA consulted the CBL, the Lesotho Water and Electricity Authority (LEWA) and the Lesotho Revenue Authority (LRA) among others to understand the likely impact of the cancellation of Vodacom’s licence.
“In the end, the board decided not to revoke Vodacom’s licence but instead it decided to penalise the firm for M134 million.
“The penalty is calculated at four percent of the company’s net operating income from the 2016/17 to the 2018/19 financial years.
“The board also considered reducing the penalty payable now to 30 percent of M134 million which amounts to M40, 2 million. The remaining 70 percent (M93, 8 million) has been suspended for five years on condition that Vodacom is not found guilty of the same offence.”
Mr Amoateng this week referred all questions to Vodacom’s corporate affairs manager, Tšepo Ntaopane, who said they could not comment on “our issues” with the regulator”.