Issue no 509 18th June 2010

The telecommunications regulator has extended the deadline for the scarce radio frequency spectrum licences to the end of next month.
The lucrative radio frequency spectrum, which is in the 2.6GHz and 3.5GHz bands, can be used to build advanced wireless broadband networks that cover large areas and transmit high volumes of traffic at a cheaper price and increase competition in the market. Companies such as Vodacom , iBurst, Internet Solutions and Cape Town-based Skyrove have shown interested in bidding for one of the four licences.
Skyrove founder and CEO Henk Kleynhans said the company would bid for the 2.6 GHz radio frequency to build a 4G network that would enable the delivery of high-speed mobile broadband services, including video-on- demand and voice-over-internet.
Companies bidding for licences have to be 30% black-owned, have a R70,000 nonrefundable participation fee and a R250,000 refundable auction fee. This will be SA's first spectrum auction.
But Internet Solutions has raised concerns about the lack of information on the model of auction that will be adopted by the Independent Communications Authority of SA (Icasa) and whether companies that have already been allocated licences in the spectrum would be allowed to apply for more. It wants those companies to be disqualified.
Internet Solutions Regulatory Director Siyabonga Madyibi said the objective of allocating additional spectrum in these two bands had always been to encourage more equitable distribution of spectrum, which would increase competition.
Madyibi said that should these players be allowed to participate in the auction, they would eliminate the chances of new entrants or smaller players acquiring spectrum, and reinforce their dominant positions. "The biggest losers will be consumers who will suffer as there will never be real competition in this environment," he said.(

Vodacom 's sale of its 24.9% stake in Wireless Business Solutions (WBS) - which owns internet service provider iBurst - is near conclusion, with iBurst shareholders expected to buy the stake.
Last month, Vodacom said it would sell its shares in WBS to apply for a spectrum allocation of its own, as its investment in iBurst could prevent it from doing so. Vodacom bought into WBS four years ago to get access to the lucrative and scarce spectrum.
iBurst CEO Thami Mtshali said last week the transaction was yet to be finalised but the shareholders had pre-emptive rights that they would exercise. "The shareholders are bullish about the business (iBurst)," he said. iBurst's shareholders include Mtshali, Brett and Mark Levy, the joint CEOs of JSE-listed Blue Label Telecoms, and Eric and Sydney Ellerine. Mtshali would not comment on the value of the stake.Vodacom and iBurst are expected to continue with their commercial partnership.
iBurst will also apply for more Wimax spectrum allocation as part of its long-term strategy to provide telecommunications services including data and voice to consumers and small and medium enterprises using different technologies.
iBurst is the major earnings contributor in the WBS stable. However, last year the group went through a difficult period that led to retrenchments. Mtshali admitted that the company had had "rough times", but said it had since weathered the storm. "We made a couple of wrong decisions," he said. Such decisions included outsourcing its call centre and changing its billing system. But the billing system was back on track and it plans to manage the call centre internally.
"About 90% of the queries are about billings, not service. This shows that our customers are satisfied with our products and services," he said. WBS would focus on growing its businesses, including its infrastructure subsidiary Broadlink, which was formed three years ago and produces R7m in turnover a month. The target is to grow its turnover to R150m a year from next year.
Mike Brown, the MD of Broadlink, said the company would add new products such as voice and information technology products, including antivirus solutions. The technology products would be sold through partners. "About 700 companies are using our products (infrastructure) and it is only natural to expand our services. We will work with existing partners to offer turnkey solutions," Brown said. iBurst has shelved its listing on the JSE to focus on growing the business. "Our target is to have revenue of R1bn but with high margins," Mtshali said.

Robson Plaza, the only major telecom and computer market in Warri has erupted in crisis and is currently engulfed in conflicts and disputes. This is as a result of a lingering war between big time dealers and small operators over the issue of price irregularity that has resulted in the non patronage of the small dealers by the consumers. According to reports, trouble started a couple of weeks ago when some big time GSM dealers from Lagos and Port Harcourt decided to rent shops in the plaza and do business alongside the other retailers because they felt business in the plaza was booming. These big dealers who have taken to big publicity and advertising on the media were extremely popular and so most consumers preferred buying from them because their prices were very low compared with the other retailers who account for more than ninety percent of the sellers. This situation greatly affected the small time dealers who felt their very existence was being threatened because according to them, they were no longer being patronized by the consumers and some were forced either to close down their shops, change their line of business or brave it out and accept anything that came their way. A trader in the complex who pleaded anonymity said that the sellers in time past have had to contend with many factors in order to stay in business including multiple taxation by government agencies, robbery and thefts, fraudulence, harasment by community and area boys including exorbitant NEPA charge and erratic power supply but that the present happening was the worst of them all. Efforts to resolve the conflict has proved abortive because the existing officials of the market association who are supposed to do that are practically either powerless, non functional or non existent because they were nowhere to be found as at the time of this report.

Plans by Telecel International, the 60 percent majority shareholder in Telecel Zimbabwe, to list on the Zimbabwe Stock Exchange to comply with telecommunications regulations, face resistance from existing and prospective shareholders who smell an ulterior motive in the proposal, it has emerged. Existing shareholders told Herald Business they would take legal action against any listing of Telecel Zimbabwe if the proposals were implemented.

In addition, Telecel Zimbabwe faces unspecified regulatory action amid revelations that the local telecommunications regulatory authority would not recognise the listing on the local stock exchange as compliance with the law.

Telecel International has to sell 20 percent of its controlling stake in Telecel Zimbabwe in line with terms upon which the local mobile phone's licence was issued by the Postal and Telecommunications Regulatory Authority of Zimbabwe in 1997.

Telecel International recently announced that it would list on the ZSE first instead of addressing the lopsided shareholding by offloading the stake to prospective or existing shareholders, some of whom have first right of refusal.

Herald Business has gathered that some of the shareholders intend to file a court interdict once it has emerged that the company had listed on the ZSE.

Sources said it has been established that listing on the ZSE might not result in genuine compliance with Potraz regulations amid fears that Telecel International might dispose of the 20 percent stake to some of its investment vehicles.

While finer details on how compliance with Potraz regulations would be achieved through listing on the ZSE remained sketchy, it has emerged that while Telecel international would whittle down its stake to 40 percent, existing shareholders' current 40 percent stake would be cut to a minority 25 percent.

Telecel International chief executive Kai Uebach is alleged to have held a meeting with ZSE chief executive Emmanuel Munyukwi on its plans to list, but the ZSE boss was not reachable on his mobile phone last week to comment on that.
What makes the issue more intriguing, sources say, was that the controlling shareholders failed to comply with Potraz requirements to address the lopsided shareholding within five years after the licence was issued.

After failing to address the shareholding irregularity in five years, which resulted in the cancellation of Telecel Zimbabwe's licence by Potraz in 2007, Telecel International was given another two years to do so, but three and a half years down the line, the international firm has defaulted on its pledge.

Telecel Zimbabwe is presently operating without a licence after Potraz cancelled it, but has been operating courtesy of Government's leniency while the company awaits a determination on the case by the Ministry of Transport, Communications and Infrastructure Development to which it appealed against.

Sources have indicated that authorities would never allow Telecel Zimbabwe to list on the ZSE before normalising the shareholding anomaly as per regulatory terms and conditions on which the licence was issued.

"According to authorities, there is no way of going to the stock exchange before normalising the shareholding structure. That is an attempt to get away with murder. We know they intend to use investment vehicles to buy back the shares and remain in firm control of the company. Local shareholders have the right of first refusal, why do they want to dispose of the 20 percent stake on the ZSE when they agreed to sell directly to locals?" said a source.

Potraz chairman Mr Davidson Chirombo said the regulatory authority was not interested in the firm's other transactions, but in compliance with its laws."What they should know is that we are only interested in compliance. We have nothing to do with their other transactions -- we do not care about that. We have to go back to basics and say what were the conditions to start with? Those are the conditions they should comply with," said Chirombo.

The 20 percent stake was sold to Telecel International under unclear circumstances, in violation of the Potraz Act, by the then Telecel Zimbabwe chairman Mr James Makamba, now in self-imposed exile, on the grounds that the company was looking for capital to start the network way back in 1998.

A number of initial prospective shareholders in Telecel Zimbabwe, which include local empowerment lobby group-the Affirmative Action Group, Wealth Creation Empowerment Corporation, the Zimbabwe Farmers' Union, Zimbabwe National Liberation War Veterans' Association and the Small-Scale Miners' Association, are lining up to swoop on the 20 percent shareholding.

To put an end to activities of fakers of its regulated products, the National Agency for Food and Drug Administration and Control, (NAFDAC) has reviewed its anti-counterfeiting strategies with the official introduction of Mobile Authentication Services (MAS) and an RFID system that cannot be duplicated or copied across the country. Some of the technologies are use of cell phones to detect fake drugs by sending SMS, Pentesta, Tray testa and internet browsing amongst others.

To this end, the Agency has directed all manufacturers of NAFDAC regulated products to begin implementation of the anti counterfeiting technologies on or before 1st of July 2010.
The Director- General of the Agency, Dr. Paul Orhii who spoke during the repeat demonstrations of the technologies at the meeting of stakeholders on the implementation of Anti- counterfeiting Technologies in the Nigerian Industry explained that the various technologies would be at no cost to consumers.

Orhii however, said the introduction of the technologies might affect cost of productions but opined that the gains are more than the disadvantages was mostly attended by Chief Executives of the various pharmaceutical companies explained that the meeting was to fast- track the process, the project and to gain a better understanding of the technologies involved and how they can benefit both the manufacturers, and protection of consumers and the products in the market.
Stating that NAFDAC and Nigerians are eager to get this process started in earnest, he said the presentations would accord stakeholders the opportunity to acquaint themselves better with these technologies and allow them to determine their cost effectiveness, work ability and suitability in Nigeria's peculiar environment.

Giving insight on how the MAS works, the Chief Executive of Sproxil, Ashifi Gogo said MAS allows the consumer to detect if a drug is fake by simply scratching the 12 digits number on the sachet of the drugs. "It allows the consumer to text the PIN to the short code 38353 to NAFDAC. All network providers are partners and this text is free of charge."

Also speaking, the President of GlobalPCCA, Dr. Steve Ams said in order to ensure that power is never a problem in the process, created a technology that is offline but with rechargeable batteries.
Also the President of Association of Pharmaceutical Industry of Nigeria (APIN) Mr.Emeka Obi who acknowledged that the technology was good however expressed worry that the introduction of the technologies would definitely increase the prices of drugs in the country.

"I am worried about Nigerians who are living below poverty line. This is because this may cause a rise in prices of drugs as we are also in business to make profits. It is a good strategy against counterfeiters".

* Vodafone Ghana has appointed Kyle Whitehill as its new Chief Executive Officer (CEO) to replace David Venn, who is expected to leave the company at the end of June, 2010.

*Former iBurst Group CEO Jannie van Zyl moves to Vodacom after leaving the wireless broadband provider in May.

* Mrs. Feriel Beji, was appointed as the new CEO of Topnet in Tunisia.