MTN boss Ralph Mupita has voiced concern at a double whammy of regulatory challenges the mobile operator faces in its home market, saying the increasingly tricky environment could dent profitability and further tarnish SA’s credentials as an investor-friendly emerging market.
Speaking to journalists this week, Mupita singled out two main issues: the Electronic Communications Amendment (ECA) Bill and an Independent Communications Authority of SA (Icasa) proposal that will affect how mobile numbers are assigned and recycled in the country.
The ECA bill, under discussion for years, aims to create a wireless open-access network (WOAN) that will require operators to share their infrastructure and spectrum with third parties.
The idea is to promote competition and lower costs for consumers, but Mupita said it would also erode the competitive advantage of operators that invested heavily in their networks over the years.
“Our perspective is that some of the asks in the bill are very challenging for maintaining a positive investment climate in SA,” he said. Why would we say that?
“Infrastructure players who have invested a lot of capital must open up their networks and be able to provide these to third parties. That is quite challenging from an investment client point of view because when you invested your assumption was that the extent of your investment can give you a competitive advantage.”
MTN, which has rolled the dice in mobile financial services as the new frontier for Africa’s biggest wireless phone operator under Mupita, spent about R100bn in SA in the past decade. It expects to spend another R50bn over the next five years, excluding spectrum costs.
Mupita’s remarks slot into the narrative about SA as one of the harshest destinations for investor capital, hobbled by the energy crisis, endemic corruption, crime and a dysfunctional rail operator, even though the broader investment climate is fortified by stable institutions, an independent judiciary and robust legal sector that respects the rule of law.
The bill, at least from Mupita’s standpoint, belies President Cyril Ramaphosa’s promises to enlist the private sector to reinvigorate the economy that has hardly grown for more than a decade, shed jobs and entrenched poverty with big spending on everything from new warehouses to mobile phone network infrastructure.
The draft legislation has been out for public comment since the final week of June.
Mupita also launched blistering criticism of the draft new rules of mobile phone numbers, or the Numbering Plan Regulations, from Icasa, which has said the amendments will prevent the misuse and hoarding of numbers by customers who do not need them, and free up more numbers for new customers who do need them.
One of the main changes in the Numbering Plan Regulations is the introduction of a new rule that deals with the activation, deactivation and reassignment/recycling of numbers. This regulation defines a term called churn rate, which is the percentage of numbers that are no longer used by customers within a given period of time. Icasa wants to keep this rate low so that there are enough numbers for everyone who needs them.
The new regulation also sets a rule that says that if a customer does not make any calls or send any messages for 20 consecutive days, the phone company must notify them that they will lose their number if they do not use it soon. The customer will have 10 more days to make a call or send a message to keep their number. If they do not do that, their number will be deactivated and quarantined for a month before it can be given to someone else.
Mupita said this would inconvenience customers and disrupt their communication.
“So if Duncan decided to go, I’m making it up, on a holiday for a month, and he didn’t use his phone for 30 days, he loses it, you know, that doesn’t really make sense,” Mupita said, using one of the journalists, Duncan McLeod, as a hypothetical example of a mobile phone user. “This is another element of the regulatory environment that’s making it more regulatory intense than it was in the past.”
He suggested that a better solution would be to extend the numbering range, as done in other countries.
“In other countries, what they’ve done is they’ve extended the numbering range. We saw this in Nigeria. So we understand the issue, that you do end up running out of numbers, because as you issue all these SIM cards, you know, you use the full number range. But there is an opportunity to extend the range.”
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