Business / Companies
Econet against fair and transparent business practice
26 Aug 2012 at 07:25hrs | Views
NetOne managing director Mr Reward Kangai has dismissed claims that his company owes Econet Wireless more than US$20 million in interconnection fees alleging that Econet is against fair and transparent business practice.
Econet, in a public notice published on Thursday, accused NetOne of practically repudiating the interconnection agreement by refusing to pay the US$20 mil despite repeated assurances that the money would be paid.
But Mr Kangai alleges that the decision to terminate interconnection services between the two mobile phone operators by Econet was just a ploy to frustrate expansion efforts by NetOne that have seen the company's subscriber base growing rapidly in recent months.
Econet last week terminated interconnection services to NetOne over the alleged debt before rescinding its decision after Justice Ben Hlatshwayo expressed concern about the inconvenience caused to the public.
NetOne had challenged the decision by Econet at the High Court in a case that was brought under a certificate of urgency last Thursday.
In an interview with The Sunday Mail Business on Friday, NetOne boss Mr Kangai said initiatives to boost sub­scriber base within his organisation were beginning to yield results and this, in turn, was proving to be a threat to their competitors.
"The real issue is not about this so-called 'unpaid inter­connection debt'. We recently launched a promotion that has won us a number of subscribers and Econet has discovered that it is unable to come up with anything to mimic the campaign. Against this background, they have resorted to this disrupting technique, which is a criminal offence in terms of the Postal and Telecommunications Act," he said.
Econet Wireless said it had no choice but to take drastic action after it became clear that NetOne "was not pre­pared to honour its obligations" under the interconnection agreement.
"When it became obvious that NetOne was not pre­pared to honour its obligations under the agreement, Econet engaged both the regulator, Potraz, and relevant Government ministries, including the Ministry of Transport, Communications and Infrastructure Development and the Ministry of Finance, in the hope that they would be in a position to intervene to ensure that NetOne hon­ours its obligations, particularly as NetOne collects the fees due to Econet from its subscribers but does not pass these on to Econet," said Econet.
Mr Kangai said the issue pertaining to the outstanding interconnection fees had long been tabled before the parent ministry (Transport, Communications and Infrastructural Development), and a decision is yet to be made. This, he said, was the reason why NetOne had not made any payment to Econet.
"The debt is only going to be confirmed after deliberations by the minister. As it stands now, we do not agree to it. The existing interconnection charging system was proving to be unfair to us. Some of the money was transferred from the Zimbabwean dollar to the dollarised economy, in turn creating problems.
"The effect of Econet's decision to transfer its post-paid to its pre-paid platform resulted in an increase in a higher number of outgoing calls from NetOne to Econet compared to incoming calls from Econet to NetOne as it was perceived cheaper to call from NetOne.
"When the cost of calls was netted off, NetOne remained a significant net payer to Econet. On this basis we made an appeal to the minister, since the set-up was favouring Econet. In the appeal, we called for a new inter­connection regime, one that would create a level playing field for all operators such as the centre-keep-all," explained Mr Kangai.
He indicated that Econet was aware that the minister was handling the issue and should have consulted with him before taking any decision detrimental to the smooth operation of business.
"Econet should have not chosen to take the matter into their own hands. That is not how business is done. They were supposed to consult with the ministry and us before taking this unwarranted action (interconnection termi­nation). This was done purely as a sabotage move. The interconnection terminations are only done during cru­cial periods such as the Harare Agriculture Show so that they lure our customers. Last year, during the ZITF they again disrupted interconnection in a bid to frustrate busi­ness," fumed Mr Kangai.
The NetOne boss added that this development had clearly exposed Econet's double standards.
"In the period 1995 to 1998, Retrofit (which is now Econet) fought with PTC and Government in the court, pointing out that monopoly in the telecomms sector was unconstitutional. They argued that people needed to have options to access other subscribers, but these are the same people who now want to monopolise the sector by disconnecting other people. It is more like they are trying to force customers to their network," said the NetOne boss.
Mr Kangai also noted that history has proven that Econet was against the conduct of business in a fair and transparent manner.
"In 2008 some time in October, Econet forced all of its subscribers to go on pre-paid billing system, arguing that they were having a problem with their billing system. But that was not the case, because foreigners managed to roam and they still used the same billing system for charging. The idea was that they wanted to get hard cash from customers, which they in turn used to purchase for­eign currency on the parallel market, a case they were later arrested for," said Mr Kangai, adding, "We had a genuine billing system that we used during the same period and considered it a loss on our part."
Econet, in a public notice published on Thursday, accused NetOne of practically repudiating the interconnection agreement by refusing to pay the US$20 mil despite repeated assurances that the money would be paid.
But Mr Kangai alleges that the decision to terminate interconnection services between the two mobile phone operators by Econet was just a ploy to frustrate expansion efforts by NetOne that have seen the company's subscriber base growing rapidly in recent months.
Econet last week terminated interconnection services to NetOne over the alleged debt before rescinding its decision after Justice Ben Hlatshwayo expressed concern about the inconvenience caused to the public.
NetOne had challenged the decision by Econet at the High Court in a case that was brought under a certificate of urgency last Thursday.
In an interview with The Sunday Mail Business on Friday, NetOne boss Mr Kangai said initiatives to boost sub­scriber base within his organisation were beginning to yield results and this, in turn, was proving to be a threat to their competitors.
"The real issue is not about this so-called 'unpaid inter­connection debt'. We recently launched a promotion that has won us a number of subscribers and Econet has discovered that it is unable to come up with anything to mimic the campaign. Against this background, they have resorted to this disrupting technique, which is a criminal offence in terms of the Postal and Telecommunications Act," he said.
Econet Wireless said it had no choice but to take drastic action after it became clear that NetOne "was not pre­pared to honour its obligations" under the interconnection agreement.
"When it became obvious that NetOne was not pre­pared to honour its obligations under the agreement, Econet engaged both the regulator, Potraz, and relevant Government ministries, including the Ministry of Transport, Communications and Infrastructure Development and the Ministry of Finance, in the hope that they would be in a position to intervene to ensure that NetOne hon­ours its obligations, particularly as NetOne collects the fees due to Econet from its subscribers but does not pass these on to Econet," said Econet.
"The debt is only going to be confirmed after deliberations by the minister. As it stands now, we do not agree to it. The existing interconnection charging system was proving to be unfair to us. Some of the money was transferred from the Zimbabwean dollar to the dollarised economy, in turn creating problems.
"The effect of Econet's decision to transfer its post-paid to its pre-paid platform resulted in an increase in a higher number of outgoing calls from NetOne to Econet compared to incoming calls from Econet to NetOne as it was perceived cheaper to call from NetOne.
"When the cost of calls was netted off, NetOne remained a significant net payer to Econet. On this basis we made an appeal to the minister, since the set-up was favouring Econet. In the appeal, we called for a new inter­connection regime, one that would create a level playing field for all operators such as the centre-keep-all," explained Mr Kangai.
He indicated that Econet was aware that the minister was handling the issue and should have consulted with him before taking any decision detrimental to the smooth operation of business.
"Econet should have not chosen to take the matter into their own hands. That is not how business is done. They were supposed to consult with the ministry and us before taking this unwarranted action (interconnection termi­nation). This was done purely as a sabotage move. The interconnection terminations are only done during cru­cial periods such as the Harare Agriculture Show so that they lure our customers. Last year, during the ZITF they again disrupted interconnection in a bid to frustrate busi­ness," fumed Mr Kangai.
The NetOne boss added that this development had clearly exposed Econet's double standards.
"In the period 1995 to 1998, Retrofit (which is now Econet) fought with PTC and Government in the court, pointing out that monopoly in the telecomms sector was unconstitutional. They argued that people needed to have options to access other subscribers, but these are the same people who now want to monopolise the sector by disconnecting other people. It is more like they are trying to force customers to their network," said the NetOne boss.
Mr Kangai also noted that history has proven that Econet was against the conduct of business in a fair and transparent manner.
"In 2008 some time in October, Econet forced all of its subscribers to go on pre-paid billing system, arguing that they were having a problem with their billing system. But that was not the case, because foreigners managed to roam and they still used the same billing system for charging. The idea was that they wanted to get hard cash from customers, which they in turn used to purchase for­eign currency on the parallel market, a case they were later arrested for," said Mr Kangai, adding, "We had a genuine billing system that we used during the same period and considered it a loss on our part."
Source - Sunday Mail
