The telecom license held by Rwandatel might be at risk after telecom regulator, Rwanda Utilities Regulatory Agency (RURA), issued an enforcement notice following the company’s failure to comply with its license requirements.
Through a legal enforcement notice signed by RURA Chairman, Eugène Kazige, Rwandatel has been notified of its failure to implement its license requirements including coverage and rollout obligations as well as quality of services and investment plan.
The notice seen by Business Times, specifically talks about Rwandatel’s alleged non compliance to honouring the agreed investment plan that is tied to its license as a telecom operator.
“The regulatory board after considerations and deliberations in its sessions of the February 4, 2011, hereby issues an enforcement notice to Rwandatel for non compliance with its license obligations related to its investment plan, coverage and rollout plan and quality of services,” the notice reads in part.
RURA says that Rwandatel is compelled to comply with the enforcement within a period of one month and is also required to submit an implementation report to the regulator on how it intends to comply with this enforcement.
Francois Gatarayiha, the acting Director General of RURA, told Business Times the decision is something the regulator has thought about for a long time, following a series of discussions with Rwandatel.
Rwandatel is a subsidiary of Libya’s LAP Green which has 80 percent equity stake in the company with the rest owned by the Social Security Fund of Rwanda (SSFR).
“In 2007, there was a privatisation process and they (LAP Green) were selected among the four bidders. The reason they were selected is because there was a plan that they had given us including upgrading the network. On the contrary, the data network on telephones and mobile network was not upgraded as per the agreement. They also promised to provide (mobile) coverage across the country,” Gatarayiha explained.
In terms of investment, he said, globally Rwandatel had pledged an outlay of $177.6 million (Rwf105.3 billion) in five years from 2007. 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,” he revealed, adding that the regulator had 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.
“In terms of rollout, they have only achieved 40 percent of what they ought to have done. This clearly shows that investment and rollout obligations in the license don’t match with what they ought to have done.”
The regulator is thought to be weighing up heavy penalties including a cash fine and a possible loss of license.
“The law provides for many penalties at the discretion of the regulatory body,” Gatarayiha said.
The response from Rwandatel management was guarded and brief.
“RURA issued Rwandatel with an enforcement notice which we feel was unjust and we are going to appeal. This is an on-going matter as it is, we cannot comment further at this time,” Rwandatel’s communications Manager, Cleophus Kabasiita told Business Times in an e-mail.
Late last year, RURA stated in its sector report that Rwandatel had lost a chunk of its data segment business to rival operator, MTN Rwanda, and the company had surrendered its position as the second largest subscribed mobile operator to new entrant TIGO Rwanda in an intense battle for market share.