KIGALI - The battle between telecom operator, Rwandatel, and industry regulator over the former’s alleged failure to honour its contractual obligation could be resolved in courts of law as the company’s chief executive office insists that his institution has lived up to its promises.
This follows two enforcement notices issued to Rwandatel by Rwanda Utilities Regulatory Agency (RURA), where the regulator warned the operator that it was risking hefty punishments, including possibly losing its operating license.
Rwandatel has appealed against RURA’s “unjust” decision, insisting that the company has lived up to its promises since 2008 after Government sold it to Libyan Arab Portfolio (LAP) Green.
LAP Green has an 80 percent stake in Rwandatel while the Social Security Fund of Rwanda owns the remaining 20 percent.
Speaking out for the first time since the row sparked off last month, Rwandatel’s CEO, Issiaka Maiga, stressed that his company has deployed latest technologies with adequate investment and quality services to its clients.
However, RURA’s warning indicates that the telecom operator did not comply with the investment plan, coverage, roll-out plan and quality of service.
Quoting from the contract between government and Rwandatel Maiga said, with regards to the rollout plan, Rwandatel is supposed to install a network capacity to accommodate two million subscribers.
“By the beginning of 2009, the company had a network capacity of one million subscribers. This means that one million subscribers can connect on our network at once without any problem. This is more than enough for five years. We still have two years to install another network capacity of an extra million subscribers,” said Maiga.
According to the agreement, Rwandatel was supposed to have, in five years since 2008, 10,000 Worldwide Interoperability for Microwave Access (WiMax) capacity— a telecommunications protocol that provides fixed and mobile Internet access.
“We have fulfilled the requirements as stated by the license, currently, it depends on the demand on the market to increase,” he said.
Maiga says that the license agreement requires Rwandatel to install a 600,000 capacity of CDMA but the regulator says that the operator was supposed to migrate to GSM, with a clear rollout plan to cover the whole country.
“When we privatised, they were on CDMA. They had to change to GSM…,” Regis Gatarayiha, the acting director general of RURA said recently.
While RURA says that Rwandatel has not even invested 40 percent of the US$177.6m commitment for five years, the company states that it spent US$72m on network upgrading alone and some US$35m in share capital, totalling to US$107m.
“RURA’s argument is that capital injected is not investment,” Maiga said, adding that the regulator prefers to consider investment in form of equipment, ignoring the amount spent on the company’s business operations internally.
“60 percent of that amount was supposed to be invested within the first three years. What is evident is that they have not even invested 40 percent of that amount,” Gatarayiha said.
Rwandatel claims to be receiving unfair treatment from the regulator albeit investing a lot of money to revamp and restructure a company that has twice changed ownership.
“Rwandatel’s status is different from other operators, for example, the third operator came in the market just to build a new company while Rwandatel has a long history; it has been privatised twice,” the official said.
He underscored that in the telecom business, if you make an initial investment, you can only expect returns on investment in a period of four to five years.
“But auditors don’t consider this fact...they consider it (Rwandatel) as an old company that has been around for long and forget that it’s a new company whose financial statement cannot be very clean.”
RURA has also registered a series of complaints from Rwandatel subscribers regarding the ineffectiveness of the company’s modems and a high rate of dropped calls, which reflected the poor quality of service.
The company says that its network has been disrupted twice; the first time was an international problem, during a breakdown Seacom’s undersea fibre optic cable and the second time was during the renovation of the SOPETRADE-MAIN roundabout road, where Rwandatel cables were damaged.
“These are the two occasions when we got abrupt breakdowns. RURA is aware of all these problems and how we solved them,” Maiga said.
According to RURA, Rwandatel has 535,710 subscribers, putting it third behind MTN Rwanda with 2.3 million and Tigo Rwanda with 685,000 users.