Home | Business | SIX MORE MONTHS FOR EPTC/MTN ‘DIVORCE’ TALKS

SIX MORE MONTHS FOR EPTC/MTN ‘DIVORCE’ TALKS

01/09/2019 08:46:00 BY WELCOME DLAMINI

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MBABANE – The country’s two telecommunications giants; EPTC and MTN Eswatini, have not concluded talks for the termination of their Joint Venture Agreement within the August 7, 2019 deadline.

A six-month period had been given to these entities by the regulator, the Eswatini Communication Commission (ESCCOM), to ensure divestiture of Eswatini Post and Telecommunications Corporation’s 41 per cent shareholding in MTN Eswatini.
On February 5, 2019, the commission ordered EPTC to take any and all actions as may be necessary to ensure it divests its ownership in MTN Eswatini within the six months implementation period.

It also ordered MTN Eswatini to take any and all necessary steps to assist EPTC in implementing the divestiture.
The commission had stated that should the two parties fail to ensure the divesture within the implementation period, a hearing shall be convened to establish whether any party is at fault and, in the event the fault can be attributed to any of the parties, consider an appropriate penalty to be imposed.

deadline extension

The Times SUNDAY knows that both EPTC and MTN Eswatini were able to file their reports with the commission regarding the talks and they requested a deadline extension.

“The regulator issued a ruling that within six months, we should have finalised the divorce but I should state that it has not been an easy task. There are a lot of processes and consultations and approvals involved. We have not been sleeping but worked very hard and you might be aware that if you are talking about divorcing from a marriage that is 20 years old, it is never going to be easy,” said a highly-placed member from one of the parties involved.

reach an agreement

The member divulged that because of the complexities of the talks, ‘we decided to ask for a further six months to try and reach an agreement. However, we are convinced that an agreement will be reached before the extended period comes to an end’.

Lindiwe Dlamini, ESCCOM’s Director - Strategy and Economic Regulation, confirmed that the parties had filed their reports.
“The commission is currently assessing the reports and cannot at this stage divulge any details,” she said.

Dlamini said if there was any extension requested by the parties, reasons for this could be obtained from those who made the plea.
Asked what the commission’s take was on the extension and who it benefitted, she said: “An extension, if there was to be any, would mean the status quo prevails.”

Sources within the telecommunications industry said as EPTC remained tied to the JVA, it was still required to pay for the technology neutral licence granted to it by the regulator despite not fully utilising it.

Because of the JVA, EPTC cannot venture into the mobile telecommunications space as that would be directly competing with MTN Eswatini where the corporation is a shareholder, thereby breaching the JVA.

paying for the licence

“Maybe it would be best if the regulator could grant a waiver to EPTC from paying for the licence until it utilises it,” suggested one of the sources.
Addressing this suggestion, Dla-mini said Section 5(9) of the Electronic Communications (Licensing) Regulations of 2016 provides that all licences shall be issued on a technology neutral basis.

She said a technology neutral licence meant the licensee was allowed to provide services using any technology it deemed appropriate.
“It is incorrect to infer that EPTC is not using its licence, the services provided by EPTC are provided under the licence issued by the Commission,” Dlamini said.

She stated that operating under a licence issued by the commission and payment of licence fees, including spectrum fees, was part of the licence conditions and could not be waived.

Another point raised was that since MTN Eswatini and Eswatini Mobile were also granted technology neutral licences, they ventured fixed wireless products much to the detriment of EPTC.

“Was there no way of protecting EPTC from the other operators by not allowing them to enter its space until the Joint Venture Agreement has been terminated?” wondered one industry player.
But Dlamini said it was worth noting that there is no ‘EPTC space’ because the country’s licensing framework was on a technology neutral basis.

licensing framework

“If EPTC is not able to provide certain services, this has nothing to do with a deficit. It is not by virtue of a deficit in the licensing framework. The commission would have acted unlawfully if, when issuing licences to MTN and Eswatini Mobile, would breach the technological neutrality enshrined in law. Further, denying MTN and Eswatini Mobile entry into the fixed market would be tantamount to allocation of markets, much against the principles of competition law,” she explained.

Meanwhile, the Times SUNDAY understands that the divorce of the two entities was a big structural change for EPTC because of the 41 per cent shareholding that comes with a lucrative annual dividend running into millions of Emalangeni.

The talks, it has been ascertained, included plans on how EPTC would be able to survive after the divesture.
“EPTC has to ensure survival and sustainability going forward. It doesn’t want to just survive but needs to develop a strategic plan with the assumption of exiting JVA,” said an impeccable source.

While previously, issues of the JVA had triggered animosity between EPTC and MTN Eswatini, it has been gathered that the current talks were smooth with no conflict coming from either of the parties.

amicable solution

“The regulator was clear that both EPTC and MTN should assist each other on the exit. So they are looking for an amicable solution. There is no tension but are in a normal partnership. The key issue is to make sure there is a level playing field to ensure fair competition,” added the source.

As recently stated by Minister of ICT Princess Sikhanyiso, exiting the JVA goes hand in hand with EPTC undergoing an unbundling process that will see the corporation being split into three separate entities.

These entities are an infrastructure corporation, a postal corporation and a telecoms corporation.
The minister said this process would require in excess of E700 million in order for it to be implemented.
What EPTC also has to consider is the future of the company, its employees and market responsibilities.