There are characteristics of blanket immunity that can discerned from the Mascom Wireless/ BOCRA dispute. The largest private telecommunications company in Botswana has an air ofbeing untouchable as exemplified, so much that it can refuse to implement a directive by its regulator, Botswana Communications Regulatory Authority (BOCRA), an authority that has licensed Mascom to operate in Botswana. By all indications, any regulatory authority is revered, because they have the power to take away a license and collapse a business completely for failure to comply with statutory requirements.
Mascom together with other Mobile phone operators, Orange Botswana, and a government owned Botswana Telecommunications Limited (BTCL) were issued a directive by the regulator, to scrape extra charges when calling off-net numbers. All of them obliged, or at least were cooperating and willing to comply with BOCRA’s statutory requirement, save for Mascom.
The company, which is by far the most profitable in its field, valued at over P5 billion, did not cooperate. BOCRA had an option to punish Mascom, but they elected not to, or could not. The reason is simple, Mascom could simply refuse to follow the regulator’s orders because they have enjoyed immunity. Just like that kid who has a backing of the notorious squad. By placing Mascom under a microscope one can understand that they have enjoyed political immunity due their importance to the Government of Botswana, or a very powerful elite group of political persons that rule this small diamond led country.
Mascom is owned 40 percent by Botswana Public Officers Pension Fund (BPOPF), the wealthy civil service pension fund that is of great interest to government due to its P55 billion liquid assets. MTN has a 53 percent controlling stake. The remaining 7 percent is held by Econet Joint Venture (Based in Mauritius), which is in partnership with Kagiso Mmusi, a local entrepreneur. These shares however are not directly held, they are owned through a company called DECI Investments. Government has until recently had a tight grip over BPOPF, so much that it influences major decisions about the fund’s financial decisions as well as appointments, which are potentially influenced to meet political objectives.
placing Mascom under a microscope one can understand that they have enjoyed political immunity due their importance to the Government of Botswana, or a very powerful elite group of political persons that rule this small diamond led country
Due to the indirect 40 percent stake in Mascom, Government has been influencing Mascom’s corporate direction, to the extent of placing Carter Morupisi, (as head of Directorate of Public Service Management (DPSM) as chairman, a capacity he enjoyed at both BPOPF and Mascom.
Morupisi recently left the Mascom Board under pressure. Just a few months back, Mascom, then still chaired by Morupusi donated houses in Morupisi’s home village. At the time, Mascom approved the donation of those houses, and then invited Morupisi now as Permanent Secretary to the President (PSP) to receive the houses at the other end. He approved the donation to his village as chairman of Mascom, then received it at the other hand as PSP. There have been several reports in the media that Morupisi has political ambitions with his home village as his base. Sources say that such a donation was one of his ways to get closer to the people, romancing the political seat.
Mascom is currently headquartered at Tsholetsa House, a building owned by Botswana Democratic Party (BDP), situated at Plot 4705/6 Botswana Road Main Mall Gaborone. Tsholetsa House was previously used as the party headquarters housing the Botswana Democratic Party Secretariat before it was taken over by Mascom.
Since Mascom assumed occupancy of the office complex, the company has spent millions of Pula to refurbish the building to match its corporate status while, as at now, paying an overly-inflated monthly rental of over P340, 000 to the BDP. The over-inflation is said to have been deliberate to make sure that BDP enjoys an undeserved, but cool P4 million plus, annually from Mascom. This is despite Mascom Wireless owning a P180 million state-of-the-art building at Phakalane, named the Mascom Innovation Centre (MIC).
Investigations by The Business Weekly & Review found that the Phakalane offices are approximately 40 percent underutilized (occupation is sitting at only 60 percent), which means that Mascom could stop spending money on rentals at the BDP owned offices and occupy the Phakalane offices. The offices were constructed in 2012 and were expected to serve as Mascom’s main technical centre. Sources reveal that Mascom’s rental of the Tsholetsa House is just an indirect donation to the ruling party, which is why the multi-billion company is reluctant to vacate Tsholetsa House.
Morupisi’s recent exit from the Mascom chair faced considerable pushback as Morupisi had preferred to remain there, despite that majority of BPOPF board of trustees wanting him out.
Sources indicate that Morupisi, maintains that he has unfinished business at Mascom. However , at a BPOPF board meeting in February Morupisi refused to explain the unfinished assignment at Mascom.
The Business Weekly & Review at the time, met Morupisi in his plush office at Office of The President (OP) where he said that he was not refusing to leave the Mascom position, saying that he had to wind up assignments that he was tasked with by the board before handing over to someone else.
One of the assignments, he indicated was a dispute emanating from the termination of a management contract with Portugal Telecomm Group. There was a disagreement on some aspects of the contract between the parties, said Morupisi, indicating that there was no time frame set for the resolution of the matter.
Sources reveal that Mascom’s rental of the Tsholetsa House is just an indirect donation to the ruling party, which is why the multi-billion company is reluctant to vacate Tsholetsa House.
When the contract between Portugal Telecom and Mascom came to an end expectations were that MTN, a major shareholder could also provide technical expertise. Then, MTN Dubai tendered for the contract and won it, but Mascom decided not to appoint MTN Dubai. Morupisi is also said have vociferously argued against MTN taking over all shares at Mascom.
When Portugal Telecom exited Mascom, Chief Executive Officer (CEO) José Couceiro was re-appointed the CEO of Mascom, now under the direct employment of Mascom Wireless effective 1st October 2015. To date, there is no citizen understudy for the CEO at Mascom. Morupisi was key in having the CEO re-employed, now directly. The CEO is responsible for all major decisions on valuable contracts.
Sources report that the personal cellphone numbers of President Ian Khama, top government officials and political powers are housed at Mascom, which means that Mascom has the history of all their communications history, which the political powers want to be kept a closely guarded secret. That can only be done when government has such an indirect control over Mascom.
The biggest fight Mascom has had so far is with the regulator – which seeks to reduce costs of services in the telecom sector. Mascom is opposed to such a reduction, because it would cut into the telecom giant’s revenue. To understand Mascom’s philosophy one needs to understand what special position the telcom giant occupies in the industry. With about 60 per cent of the market Mascom seldom moves under any duress. And the money keeps coming. A recent study by BOCRA indicates that the telecos bear a cost of about P0.26 per minute for every call made, both within and across their network. Mascom charges P1.20 per minute for calls made within its network, a cool 4.6 times the cost. But Mascom makes more cash than that, it charges P1.50 for any call made from its own network to another telecom company such as Be Mobile or Orange Botswana. There is a self-preservationist logic to Mascom’s logic in this – as the dominant player it only makes sense that it dis-incentives those within the company’s network from calling those outside of it. If the people within its network are a substantial group, and they are, it encourages any new subscriber to get a Mascom simcard, as a way to reach the relatives, friends and family members who are likely to be in the Mascom network.
BOCRA Acting CEO Tshoganetso Kepaletswe calls this behavior the Club Effect. “Club Effect is where a service provider, normally, large operators, creates distorted pricing such that more and more customers are attracted to subscribing to this network because it offers the cheapest On Net prices. The Club Effect drives small operators like Mobile out of business as consumers would choose to move to Mascom, competition will die and it means Mascom would become a monopoly service provider establishing itself as the only service provider in the market. Monopoly is not desirable since it leaves consumer with no bargaining power,” explains Kepaletswe in the papers he submitted in the recent case by Mascom against the regulator in which the market leader was challenging the forced tariff reduction. “Given that the cost of providing an On-Net call (I.e. 26 thebe/min) is the same as the cost of providing an Off Net call (I.e. 26 Thebe/min) there is no justification that service providers much charge Off Net differently from On Net calls. The consumer has been paying the unjustified premiums for years and (BOCRA) rules that consumers must continue paying the unjustified premiums up to June 2018 as opposed to a longer period” submits Kepaletswe.
In a way, having cornered the market so far, Mascom has no enthusiasm to encourage competition in the industry, hence its vehement opposition to the tariff reduction. In a way, Kepaletswe argues, Mascom as the dominant player seeks to retain the status quo not just because it accrues substantial revenue from this arrangement but most importantly it has worked for Mascom because it keeps potential competitors at arm’s length, and the dominant player can continue to milk the customer. But BOCRA makes a more sinister allegation, that Mascom seeks to deploy the regulator as an accomplice in this mugging of the customer. BOCRA acknowledges that by allowing the continuing of these rates for even an extra day is an accomplice in the daylight robbery of ordinary people who are the users of telecom services.
BOCRA is prepared to pace the reduction in tariffs for a period stretching to until June 2018, thereby Kepaletswe says, saving the telecom possible sudden losses. But he is agreeing to rubberstamp the continued overcharging of customers. “Service providers like Mascom and others will continue enjoying the proceeds from the unjustified premiums up to June 2018.BOCRA had an option to direct immediate removal of Off-Net premium, however, BOCRA opted to protect the business/revenues of service providers by seeking implementation over an extended period of 2 years as opposed to 1 year”. the regulator is prepared to bend backwards to cushion the shock of revenue reduction to Mascom, even against the threat that other players may close down between now and June 2018, when the reduction would have taken full effect.
Mascom is asking for 3 years more of the transition. In a way Mascom is asking that it be allowed to milk the customer a little bit longer.
This on its own makes Mascom a politically sensitive and valuable company. The CEO of BOCRA would also think twice, because upsetting Mascom is indirectly upsetting his employers.