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Vodacom fined M8 million

...Defaulted on annual regulation fees

…Battles LCA in court

Lerato Matheka

The Lesotho Communications Authority (LCA) has fined the giant telecommunications company, Vodacom Lesotho, M8 million for failing to pay regulating fees due on June 30.

According to documents seen by Newsday, Vodacom breached the Communications Act of 2012 by failing to pay their annual regulatory fees for the 2019/2020 financial year.

Their default came after a string of communication between Vodacom’s Managing Director, Philip Amoateng and LCA’s Chief Executive Officer, Mamarame Matela, where the telecommunications company was requesting a revision of their annual fee charged by the LCA.

In one of the correspondence between the two, seen by this paper, the telecommunications company requested LCA to reverse the initial invoice charged as per Vodacom’s annual profits.

According to Amoateng’s letter, Vodacom wanted the Authority to revise the charge of the universal service fund which was incorporated within the annual invoice for the 2018/19 financial year.

Vodacom also wanted the LCA to exclude the revenue generated from their mobile money service Mpesa, a request which was denied by the Authority.

“…Vodacom requests the Authority to revise the invoice referred to the above (Request for revision of the universal service fund annual invoice for the year 2018/19) by excluding revenue generated from the provision of mobile financial services (M-Pesa in line with the principle of relevance in charging licencing fees as stipulated in the Licencing Fees and Classification Rules, 2018,” the telecommunication penned adding that the universal service obligation fee payable by unified Licensees is 1.5% .

“Rule 2 defines Net Operating Income as ‘…gross turnover on telecommunications business of the operator’, inclusive of contracted amounts received for roaming and interconnection after deducting contracted amounts paid for roaming and interconnection. The definition of No1 under Rule 2 recognises that operators provide various services, some of which do not fall within the scope of telecommunication, such as M-Pesa. When license fees are charged, revenue generated from such service will not be included,” Amoateng said in his letter noting that M-Pesa revenue is made up of transaction fee charged to customers when accessing M-Pesa services such as purchasing electricity, paying school fees, and other services using Mpesa.

Matela in her letter (also seen by Newsday) to Vodacom noted that financial statements submitted by Vodacom did not reflect revenue collected from ‘non-telecommunications businesses’.

“The trial balance does not indicate any revenue generated from non-telecommunications business. Note 1 which provides a breakdown of revenue reflects that there is also a M66.13 million income. However, there is no further note indicating that such revenue was generated from non-telecommunications business,” Matela charged noting Vodacom’s trail balance classified the M-Pesa revenue under “data revenue” as ongoing rev-data-other transactions/ M Commerce and Ongoing Rev-Data-Other transaction/ M Commerce 10.

“…The Authority could not identify from Vodacom audited financial statements that other revenue refers to revenue generated from non-telecommunication business and that “ongoing Rev-Data- Other transactions/M Commerce” refers to M-Pesa revenue. Your request to revise the invoice by excluding revenue generated from the provision of mobile financial service (M-Pesa) is not accepted,” LCA boss said. 

Last month LCA penned a fine letter to Vodacom; “…In accordance with Rule 4 of the Lesotho Communications Authority (Licensing Classification and Fees) Rules, 2018. We impose a penalty of M8, 182 902.54 which is 20% of the outstanding amount for non-payable of regulatory fees. This amount is payable by 13 August 2019. The outstanding regulatory fees for the financial year 2019/20 of M40, 914, 512.68 is also payable immediately.

Following the refusal to revise the invoice, and the penalties imposed, Vodacom dragged LCA to court and the case is pending, to be heard by Judge Molete.

It was dated for September 5 but failed to be heard on account of Judge’s absence.

When Newsday went to the Commercial Court to inquire, the Judge’s Clerk Hatasi confirmed the case failed to be heard yesterday because the judge was still in hospital in Bloemfontein South Africa.

“It was expected that the case would be heard today, but the judge is still not yet back. He is still in Bloemfontein at hospital. In any case, the parties were going to ask for more time because they have agreed to settle, so it might not even be heard in an open court,” she said.

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