Just a few days ago we reported that the Lesotho Communications Authority (LCA) had revoked the unified licence of Vodacom Lesotho, but it appears Vodacom has survived, for now, after the high court of Lesotho temporarily blocked the regulator from taking away Vodacom’s operating licence.
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Last week Vodacom said it was preparing an urgent application as the Lesotho Communications Authority (LCA) revoked its permit.
Over the weekend Vodacom said that the court has granted an interim order interdicting the LCA from enforcing the payment of the fine of 134-million loti (R134m) it imposed on Vodacom and revoking the company’s unified licence.
Lesotho’s telecom regulator revoked the operating licence of Vodacom’s 80%-owned unit on Thursday, citing failure to pay a portion of the fine for what it termed conflict of interest relating to the company’s external auditors.
About a third, or R40.2m, of the fine was due on October 7, but the LCA said Vodacom Lesotho failed to pay up, prompting it to instantly withdraw the permit of the country’s biggest mobile phone operator, which brings in just more than R600m to its parent’s annual core earnings of almost R38bn.
The remaining R93.8m was suspended for five years, on condition that the company “does not commit any further contraventions of its regulatory obligations during the said period”, the regulator said in a letter seen by Business Day addressed to Vodacom’s Lesotho subsidiary.
The company’s permit was valid until 2036, and it continued to provide services having informed the regulator of its intention to challenge the decision.
The crux of the issue is that from 2015 to 2019 Vodacom Lesotho used an external auditor whose partner is related to the company’s board chair. The partner is a sister-in-law to the chairperson. This, the LCA said, meant the audit firm was not independent enough and its assessment of the company’s financials was probably compromised.
In terms of the court order, the regulator must now show why the interim order should not be made a final order of the court. The LCA has until October 23 to make its argument.
Vodacom spokesperson Byron Kennedy said: “We assure citizens of Lesotho that we remain fully focused on delivering great value and a superior customer experience to the 1.2-million people who have chosen us as their network provider of choice and the about 661,000 M-Pesa users who rely on us for inclusive access to financial services.
“In other words, it remains business as usual for all our valued customers,” he said.
