Consumers not in support of Telecom’s plans to buy Leo

The Namibia Consumer Trust (NCT) herewith would like to share with consumers and relevant stakeholders its position on Telecom Namibia’s planned acquisition of Leo with regard to its submission on 21 February 2012. The Namibia Competition Commission (NaCC) recently invited comments from stakeholders to enable its decision on the application by Telecom Namibia to acquire Leo.
The underneath NCT position/request to Communications Regulatory Authority of Namibia (CRAN) and NaCC is in line with their relevant acts. The purpose of the competition act (2 of 2003) is to “provide consumers with competitive prices and product choices” (section 2 b) as well as to “promote a greater spread of ownership.. .” (section 2 (f)).
While at the same time the purpose of the communications act (8 of 2009), which is being enforced by CRAN, is to “to ensure fair competition and consumer protection in  the telecommunications sector” (section 2 (k)). CRAN is further obliged by the communications act under section 2 (g), “to ensure that the costs to customers for telecommunications services are just, reasonable and affordable” as well as “to protect public interest” (section 2 (l)).
For too long “return on investment” has been prioritised in the telecommunications sector at the expense of consumer/public interest. This has affected the quality and affordability of GSM service provision. Even ethics was found to be a problem in the GSM service provision as recently as November 2011. This has prompted NCT to lodge a complaint with the regulator to address this problem and consumers are keenly awaiting a final decision, even though the initial decision found the GSM service provider guilty.
Even when the Namibian Communications Commission (CRAN predecessor) sought to strike a balance, this was met with resistance through court action by the organisation which made 28% profit (2009). Namibian consumers will not be intimidated by economic might as they can and will implement measures to compel service providers to respect consumer rights if/when regulatory interventions fails, are disregarded or inadequate. Telecommunication services (mainly GSM) in Namibia are still not reflective of costs incurred by the service provider, thus exorbitant.
Both NaCC and CRAN are strongly encouraged to finalise complaints submitted earlier by consumers on consumer rights violations.
NCT submitted a response on the recent public call for submissions on Telecom Namibia/Leo to bring the consumer perspective to the fore. The Telecom Namibia application/request is not in line with the relevant purposes of the two acts, thus the NCT does not support Telecom Namibia’s acquisition of Leo.
Judging from recent Telecom utterances on the issue, it appears as if the single most important reason for their decision is that CDMA may no longer be viable and that they are keen to move over to GSM technology. Telecom further claimed that the acquisition will have “tremendous benefits” for consumers, which the NCT of course does not agree with.
Namibia Post and Telecommunications Holdings (NPTH) have significant authority/ownership over Mobile Telecommunications Limited (MTC) due to its shareholding (60%). At the same time MTC is said to have about 80% market share in the GSM sector. The situation is similar for Telecom Namibia with regard to ownership and market share in the fixed line sector. They too are significantly, (100%) owned by NPTH. Therefore enabling Leo’s acquisition by Telecom Namibia will no doubt consolidate NPTH’s market share in the GSM as well as the fixed line sector. Approving the merger or acquisition of Leo by Telecom Namibia would therefore strengthen NPTH’s dominant position in both GSM and fixed telephone, thereby putting the whole telecommunications service provision in single hands (NPTH). Consequently such a move is not in consumers’ interest considering the provision of telecommunication services with regard to choice, quality and price. Telecommunications is a key infrastructure in the economy of Namibia, thus ownership needs to be spread in order to enable choice (competition). However, NCT agrees that MTC needs strong competition, but not through Telecom Namibia Leo merger/acquisition.
Telecom Namibia ought to apply for a license directly if it is keen to provide GSM, while other investors could acquire Leo. The assumption that the Namibian market can only accommodate two providers is a myth and has more to do with service provider behaviour, regulator ability/capacity and overall credibility of the sector in the Namibian market.