A licensing row over Eskom's deal with Telecoms Lesotho has thrown some spanner works in the joint venture between South Africa's Eskom and Econet Wireless International in Lesotho. Eskom Enterprises has a joint venture with Econet Wireless International which created an investment vehicle known as Mountain Kingdom Communications, which then acquired a 70 per cent stake in Telecoms Lesotho

But the deal is now enmeshed in controversy over licensing conditions as the partnership has failed meet the targets in the licence it was issued. But John Bayley, the General Manager for corporate finance at Eskom Holdings, said disagreement had arisen over expansion targets after an agreement had been reached earlier. "In terms of the agreement reached with the government of Lesotho, a systems expansion target of 50,000 new connections had to be made within a five-year period," Bayley said. "However, the licence which was then issued to us, prescribing 145,000 new connections, was clearly at variance with targets agreed to between the parties but talks are under way to resolve the situation".

He said of Lesotho's population of 2 million people, living in a weak economy with severely underdeveloped infrastructure, 50,000 was the most plausible figure of those who could afford a telephone line." There just aren't that number of people [145,000] with disposable incomes in Lesotho whose economy is under very severe strain. At any rate the fact that most of the 50,000 connections would be in remote, rural and inaccessible mountainous country makes it a very expensive and less cost effective assignment for the company," he said. "We have asked the Lesotho government to revert to the original agreement, paying particular attention to the conditions negotiated with their privatisation unit". Since then Eskom Enterprises has written off or made an impairment provision of R110 million of its investments in Mountain Kingdom Communications.

Whilst Eskom protests that the licence was unreasonable, it raises serious questions as to why it accepted a licence with a revised figure that it clearly felt it could not meet.

In Nigeria, the NCC recently cancelled the Neskom licence because of the inability of the company to roll-out services two years after it was issued a long distance licence.