News / National
Ugly Econet-Telecel tiff continues to play out
13 Oct 2013 at 06:25hrs | Views
The crusade by the country's largest telecommunication gladitors - Econet Wireless Zimbabwe and Telecel - to defend their turf, convert new subsribers and grow their market has spawned an ugly tiff as the two giants continue to cross swords almost at every forum.
The incident which played out during the recent Kariba Invitation Tiger Fishing Tournament (KITFT) when Telecel staff, who were the main sponsors of the event, allegedly chose to dismantle Econet's exhibition stand is a manifestation of deep-seated hostilities between the two giants.
Telecel is the country's second biggest mobile operator, boasting of more than 2,6 million subscribers, and is presently trying to wrest more subscribers from Econet, which currently has more than 8,6 million customers.
"This is just the beginning. Econet thought it had made a wise move by disconnecting us. The decision was reversed and business is now flowing as usual. However, we are still going to make them suffer for the decision they took (to disconnect Telecel)," said an official from Telecel in the heat of the moment.
Organisers of the KITFT had to comply with Telecel's demand since it was the major sponsor. If anything, observers believe that the rift between the two mobile operators continues to widen. Market watchers contend that with Zimbabwe's mobile teledensity having reached 97 percent and nearing saturation, growth of other telecommunications companies will be achieved at the expense of Econet that has almost reached its subscriber threshold.
This, it is argued, is the reason why Econet has become active in unleashing value-added services in order to lure more customers and develop a new niche in an ever-changing market.
Efforts to get an official comment on the stand off from the two companies proved futile last week. However, last week, during the launch of a mobile savings account, EcoCashSave, Econet chief executive Mr Douglas Mboweni indicated that a mobile network operator could only remain afloat by coming up with innovative initiatives.
"We now have a situation whereby there are more sim cards on the market than people. Econet has made it a policy that it continues to launch new products so as to maintain its market position," he said.
Though the rift between Econet and Telecel escalated this year when the former disconnected the latter from its network, claiming the operator was not registered, it seems there have always been simmering tensions between the two entities, principally emanating from some of the founders - Mr Strive Masiyiwa and Mr James Makamba. Before the official Econet-Telecel disconnection this year, the latter made a complaint to Potraz to the effect that it had recorded a major decline from 90 percent success rates to low levels of about 40 percent just in one week in July as result of the throttling tactics by Econet. Telecel subscribers were essentially failing to get through to Econet lines.
The move (throttling tactic), it is claimed, was the only way to control the mass traffic which was now being driven by Telecel,
However, Econet argued that the disconnection of Telecel from its network was in line with the terms of its new operating licence issued under the Telecommunications Act.
According to the leading mobile telephone operator, the act prohibited it from interconnecting with unlicenced operators and Telecel had no valid licence then. Econet further argued that Telecel was not a holder of a valid licence issued in terms of Section 37 of the Act from 1996. Telecel was announced as the winner of a tender to operate a mobile telecommunications service in 1996.
The award of the licence to Telecel Zimbabwe was declared invalid by a High Court judgment handed down on December 31, 1997. Telecel subsequently appealed to the Supreme Court. The two (Econet and Telecel) had been connecting for years under the circumstances without problems.
"In any event, as is a matter of public record, the Telecel licence was subsequently validly terminated. Assuming the licence issued to Telecel was valid and was not validly terminated, such licence expired on June 2, 2013," Econet said.
While this issue may have been cleared between Telecel and the Government, pundits contend that Econet Wireless was stung by the fact that it had already paid US$85 million to renew its 20-year operational licence. The situation, according to Econet, gave the other network that had not paid the renewal licence fee an unfair advantage over them, given the liquidity constraints characterising the market and the amount of money it is owed.
"Econet cannot handle competition. The problem we have at the moment started when we launched a 50 percent tariff reduction promotion across all networks," said the Telecel official in Kariba.
But, analysing developments in the market, one gets to notice that Telecel is having its fair share of controversy in its quest to boost subscribers. The mobile telephone service provider has been sending bulk SMSs to Econet subscribers luring then to its network. The situation has not gone down well with officials at Econet.
With Econet having enjoyed dominance on the market for a long time, Telecel and NetOne have come up with initiatives that are attracting subscribers. But, as the fight for market share among mobile networks in Zimbabwe intensifies, it is the customers who are emerging the winners as the three networks bid to outdo each other in tariff reduction.
However, overall, the promotions are causing problems to Econet since it was not doing much to match up, until recently when it introduced the daily data bundle service that has an option to give subscribers 10 minutes for a US$1. Also, a number of voice calls are directed to its network and, with the other networks struggling to pay their interconnection fees, Econet continues to lose out. In its first attempt to counter the promotions by other networks, Econet reduced its tariffs by 60 percent to all networks adding to the BuddieZone promotion that is was already running, but was forced to revert to the old billing system by Potraz. Potraz argued that it issued the directive because Econet had not sought approval for the move and also that certain conditions had been flouted by Econet
The discount, Potraz added, was above the 50 percent limit. To date, Econet is adamant that other mobile operators are not getting the same treatment from the regulator. But, Potraz has dismissed this assertion citing that promotions by the other operators had been approved for certain periods and were subject to renewal.
Telecel is presently engaged in a subscriber acquisition spree and chief among its strategies has been granting of bonus credits for both voice and data, a situation in which a US$1 purchase of voice credits also comes along with data bundles worth the same amount.
Telecel's promotions include the Mega Juice Reloaded and Super Voice across all networks.
The incident which played out during the recent Kariba Invitation Tiger Fishing Tournament (KITFT) when Telecel staff, who were the main sponsors of the event, allegedly chose to dismantle Econet's exhibition stand is a manifestation of deep-seated hostilities between the two giants.
Telecel is the country's second biggest mobile operator, boasting of more than 2,6 million subscribers, and is presently trying to wrest more subscribers from Econet, which currently has more than 8,6 million customers.
"This is just the beginning. Econet thought it had made a wise move by disconnecting us. The decision was reversed and business is now flowing as usual. However, we are still going to make them suffer for the decision they took (to disconnect Telecel)," said an official from Telecel in the heat of the moment.
Organisers of the KITFT had to comply with Telecel's demand since it was the major sponsor. If anything, observers believe that the rift between the two mobile operators continues to widen. Market watchers contend that with Zimbabwe's mobile teledensity having reached 97 percent and nearing saturation, growth of other telecommunications companies will be achieved at the expense of Econet that has almost reached its subscriber threshold.
This, it is argued, is the reason why Econet has become active in unleashing value-added services in order to lure more customers and develop a new niche in an ever-changing market.
Efforts to get an official comment on the stand off from the two companies proved futile last week. However, last week, during the launch of a mobile savings account, EcoCashSave, Econet chief executive Mr Douglas Mboweni indicated that a mobile network operator could only remain afloat by coming up with innovative initiatives.
"We now have a situation whereby there are more sim cards on the market than people. Econet has made it a policy that it continues to launch new products so as to maintain its market position," he said.
Though the rift between Econet and Telecel escalated this year when the former disconnected the latter from its network, claiming the operator was not registered, it seems there have always been simmering tensions between the two entities, principally emanating from some of the founders - Mr Strive Masiyiwa and Mr James Makamba. Before the official Econet-Telecel disconnection this year, the latter made a complaint to Potraz to the effect that it had recorded a major decline from 90 percent success rates to low levels of about 40 percent just in one week in July as result of the throttling tactics by Econet. Telecel subscribers were essentially failing to get through to Econet lines.
The move (throttling tactic), it is claimed, was the only way to control the mass traffic which was now being driven by Telecel,
However, Econet argued that the disconnection of Telecel from its network was in line with the terms of its new operating licence issued under the Telecommunications Act.
The award of the licence to Telecel Zimbabwe was declared invalid by a High Court judgment handed down on December 31, 1997. Telecel subsequently appealed to the Supreme Court. The two (Econet and Telecel) had been connecting for years under the circumstances without problems.
"In any event, as is a matter of public record, the Telecel licence was subsequently validly terminated. Assuming the licence issued to Telecel was valid and was not validly terminated, such licence expired on June 2, 2013," Econet said.
While this issue may have been cleared between Telecel and the Government, pundits contend that Econet Wireless was stung by the fact that it had already paid US$85 million to renew its 20-year operational licence. The situation, according to Econet, gave the other network that had not paid the renewal licence fee an unfair advantage over them, given the liquidity constraints characterising the market and the amount of money it is owed.
"Econet cannot handle competition. The problem we have at the moment started when we launched a 50 percent tariff reduction promotion across all networks," said the Telecel official in Kariba.
But, analysing developments in the market, one gets to notice that Telecel is having its fair share of controversy in its quest to boost subscribers. The mobile telephone service provider has been sending bulk SMSs to Econet subscribers luring then to its network. The situation has not gone down well with officials at Econet.
With Econet having enjoyed dominance on the market for a long time, Telecel and NetOne have come up with initiatives that are attracting subscribers. But, as the fight for market share among mobile networks in Zimbabwe intensifies, it is the customers who are emerging the winners as the three networks bid to outdo each other in tariff reduction.
However, overall, the promotions are causing problems to Econet since it was not doing much to match up, until recently when it introduced the daily data bundle service that has an option to give subscribers 10 minutes for a US$1. Also, a number of voice calls are directed to its network and, with the other networks struggling to pay their interconnection fees, Econet continues to lose out. In its first attempt to counter the promotions by other networks, Econet reduced its tariffs by 60 percent to all networks adding to the BuddieZone promotion that is was already running, but was forced to revert to the old billing system by Potraz. Potraz argued that it issued the directive because Econet had not sought approval for the move and also that certain conditions had been flouted by Econet
The discount, Potraz added, was above the 50 percent limit. To date, Econet is adamant that other mobile operators are not getting the same treatment from the regulator. But, Potraz has dismissed this assertion citing that promotions by the other operators had been approved for certain periods and were subject to renewal.
Telecel is presently engaged in a subscriber acquisition spree and chief among its strategies has been granting of bonus credits for both voice and data, a situation in which a US$1 purchase of voice credits also comes along with data bundles worth the same amount.
Telecel's promotions include the Mega Juice Reloaded and Super Voice across all networks.
Source - sundaymail
