Vodacom, LCA in fresh court battle

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Mohalenyane Phakela

VODACOM Lesotho and the Lesotho Communications Authority (LCA) are locked in a fresh legal battle over the latter’s directive ordering the mobile communications giant to seek the authority’s approval before appointing chief executive officers (CEOs), directors and other senior managers.

Vodacom Lesotho and Econet Telecom Lesotho are the country’s two mobile phone operators. They both received letters from LCA CEO, ‘Mamarame Matela, ordering them to obtain written approval from the authority before appointing CEOs and other top officers.

A copy of the letter seen by this publication is titled: ‘Directive on prior approval of approval of directors, officers, senior managers and auditors of unified licensees and biennial fit and proper assessments’.

It reads: “all holders of unified licenses shall obtain prior written approval of the Authority before appointing any of the following officers:

“All directors; chief executive officers; chief technology officers; chief financial officers; chief operations officers; human resource managers; company secretaries; head of legal; head of compliance; head of marketing and public relations; head of commercial and sales; chief internal auditors and chief information officers.

“All existing officers shall within three months of issuance submit their applications for approval accompanied by comprehensive curriculum vitae indicating relevant qualifications, experience in their current roles including certificates of registration with relevant professional bodies where applicable,” Ms Matela states in her letter to the mobile operators dated 10 November 2020.

She said all senior company officers would now be required to complete a ‘Fit and Proper Assessment Form’ which will be available on the LCA website.

They must complete the form within three months of its issuance by the authority and thereafter, every two years, she said.

However, Vodacom is opposing the move and it has petitioned the High Court to set aside the LCA decision.

The LCA, the chairman of the Board of Directors of the LCA, Ms Matela and Econet Telecom Lesotho are first to fourth respondents respectively in the application filed last week.

Vodacom wants “the decision by the first respondent (the LCA) to issue a directive described in the letter to applicant dated 10 November 2020 be reviewed and set aside”.

In his founding affidavit accompanying the application, Vodacom managing director, Phillip Amoateng, states that the LCA directive is contrary to the Administrative Regulations. He does not specify which regulations he is referring to. He also argues that the LCA failed to provide reasons for its decision to control managers’ appointments and therefore its directive should be set aside.

“The directive does not attempt to comply with the provisions of the Administrative Regulations. The LCA invokes certain powers in the (Communications) Act for its decision to issue the directive but fails to provide any reasons, let alone documents or evidence in a transparent manner for such a decision,” Mr Amoateng states in his court papers.

“Such failure to comply with its own rules renders the directive fatally defective and there is nothing to indicate that the LCA intends to apply the rules of natural justice requiring a fair hearing before deciding to effectuate the egregiously burdensome and invasive directive.

“Furthermore, the failure by the LCA to provide reasons when it was obliged to do so brings into operation the presumption that the LCA in fact had no valid reasons for making the decision to issue the directive. Thus, even if it had the power to make the directive, which Vodacom Lesotho disputes, the absence of reasons indicates that the LCA was using the power for an ulterior purpose that it did not wish to disclose and thus exercised the power for an improper purpose.”

The LCA directive came against the background of the authority’s attempts to stamp its authority on what it views as errant behaviour by the mobile communications companies.

The two companies have had run-ins with the LCA over various alleged infractions.

Vodacom is currently locked in a legal battle with the authority over its 8 October 2020 decision to revoke the latter’s operating licence.

The LCA issued a notice to revoke Vodacom’s licence after the company refused to pay a M40, 2 million imposed on it for allegedly violating its licensing regulations by among other things “submitting audited financial statements that were unaccompanied by a certification issued by an independent external auditor”.

Vodacom instead opted to file an urgent High Court application for an interim order nullifying the revocation. This was duly granted by Justice Thamsanqa Nomngcongo paving the way for the company to continue providing services until its application for a final order against the decision to revoke its licence is heard by Justice Keketso Moahloli.

The LCA board chairperson, Ms Matela and the LCA are first to third respondents respectively in the application.

Econet on the other hand was fined M1, 5 million for the late submission of its licence renewal application. It has since paid the fine. It remains to be seen if it will follow Vodacom’s example and challenge the LCA directive.

Apart from issuing the directive, the LCA also amended the licensing regulations to allow more players into the mobile communications industry.

In the past, companies had to wait for the LCA to issue an invitation to apply for them to apply for licences but the invitations never came enabling Vodacom and Econet to enjoy a duopoly in the sector for more than a decade. Vodacom was the first to be licenced in 1996 and Econet followed suit in 2008.

But their stranglehold on the sector is set to end after the LCA amended the regulations to allow more players. In terms of the new regulations, prospective mobile phone operators need not wait for the LCA to invite applications. They can apply without prior invitation as long as they meet the criteria which includes “financial and technical capabilities to own and construct a network that will efficiently provide services to the Basotho nation”.

 

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