Search This Blog

For more coverage follow us also on Twitter and Facebook


Wednesday, 4 February 2015

MTN ‘KEEPS SWAZI KING IN ITS POCKET’

News circulating in Swaziland that a second mobile phone operator might soon operate in the kingdom is fanciful.

The present monopoly provider MTN has the kingdom’s absolute monarch King Mswati III in its pocket and the Prime Minister Barnabas Dlamini has substantial financial interests in the company and it is not in his personal interest to see competition in the market.

The Times Sunday, an independent newspaper in Swaziland, reported that a company called Swavitel with connections to Vietnam-based mobile operator Viettel Telecomm was awaiting a decision of the Regulator of the Swaziland Communications Commission (SCCOM) on its application to register. 

The newspaper gave no further information about what services Swavitel hoped to provide.

MTN has been the monopoly mobile provider in Swaziland since 1998 and services are provided in a joint venture between MTN, the Swazi Government and the Royal Family.

MTN pays dividends directly to the King who holds 10 percent of the shares in MTN in Swaziland and is referred to by the company as an ‘esteemed shareholder’. It is reported that MTN paid E114 million (US$11.4 million) to the King over the past five years. 

In 2009, Earl Irvine, then US Ambassador to Swaziland, wrote a confidential cable (later published by Wikileaks) in which he said the King operated in his own financial interest. Part of the cable said, ‘Royal politics and King Mswati’s business interests appear to have caused the ouster of Mobile Telephone Network (MTN) CEO Tebogo Mogapi and halted parastatal Swaziland Post and Telecommunications Corporation (SPTC) from selling the MTN shares it owns to raise money for a Next Generation Networks (NGN) cell phone project. 

‘Industry and press observers privately indicated that the King, who already owns many MTN shares, had wanted to purchase the MTN shares himself at a cheaper price than the buyer, MTN, was offering SPTC. 

‘Government officials later prevented the sale, and recently did not renew the work permit for CEO Mogapi, a South African citizen, apparently in retaliation for his role in the transaction, as well as the CEO’s reported decision to oppose government efforts to use the MTN network for electronic surveillance on political dissidents.’

The cable went on, ‘The government’s halt of parastatal SPTC’s sale of MTN shares demonstrates the impact the King’s and other influential individuals’ private business interests can have on business transactions in Swaziland. 

‘Government officials would likely prefer a more malleable Swazi CEO at MTN who would cooperate more fully with royal and government wishes.’

In 2011 it was reported that Prime Minister Dlamini owned E392,000 worth of shares in Swazi Empowerment (Pty) Limited (SEL), a company that in turn had a 19 percent shareholding with MTN Swaziland.

Dlamini is the man in charge of the government-controlled parastatal, SPTC and is therefore a key decision maker in the affairs of Swaziland’s national posts and telecommunication. 

This raised questions about Dlamini’s impartiality when making decisions about SPTC.

In September 2011, Musa Holphe, of the Swaziland Coalition of Concerned Organisations, wrote ‘Since SEL’s main, if not its only, investment is MTN Swaziland it is important to understand that the value of the SEL shares will be slashed if anything happens that affects MTN’s profitability.’ 

He added, ‘It is shocking to see how much money is generated by MTN and that, in spite of the grinding poverty of the majority of us; vast riches are still secretly flowing into the pockets of the elite.’

A research article written by Ewan Sutherland of the University of the Witwatersrand, Johannesburg, South Africa, and published in December 2014 in the Communicatio academic journal, explored telecommunications in Swaziland and concluded there was no competition for mobile phones in the kingdom and ‘the monarch and his cronies are financially tied to Swazi MTN, seeking to neuter the state-owned SPTC. The government has no concern for consumers, service delivery or economic growth, with the King and his prime minister looking after their personal financial interests.’

In the article, written before the news about Swavitel emerged, Sutherland wrote , [I]t is difficult to see how any investor could have confidence, unless it had the sovereign on their side and, more likely, in their pocket. 

‘The monarch has a significant and lucrative investment in the principal operator, with the effect of confusing and confounding an already feeble system of governance. The opaque profit-seeking of the King conflicts with the purported aspiration to good governance of telecommunications markets and the interests of his subjects. In a constitutional monarchy, arrangements can be made to keep the investments of a monarch separate from politics, allowing for transparency, accountability to parliament and the avoidance of interference with governance (e.g., Japan and the Netherlands).

‘A feudal monarchy knows no such distinction, there are no conflicts of interest for ministers, regulators and directors – they obey their king. It echoes the problems of Morocco, where its king has private interests in telecommunications, has ministers sit on the supervisory board of the stateowned operator, and he appoints the regulator and is head of the judiciary.

Ordinarily the MTN Group would be expected to favour competition and market entry. However, in the Kingdom of Swaziland it has violently opposed competition, going to considerable lengths to block a second mobile operator and even a fixed wireless service. This record removes any presumption in other jurisdictions that its actions are pro-competitive. Equally, it has been happy to work with Mswati III, one of the exotic collection of autocrats with whom it does business, with no fear of reputational risk.’

See also
KING LIVES LAVISHLY ON FIRMS’ DIVIDENDS
SWAZI ELECTION – SPONSORED BY MTN
DOES PM HAVE A FORTUNE FROM MTN?
 
US DECRIES SWAZI KING ON MTN DEAL
PHONES CUT AS SWAZILAND PROTESTS

No comments: