MTN CEO says regulatory environment prevents investment

MTN CEO Ralph Mupita sharply criticised the telecommunications regulatory environment in South Africa, saying they contradict the President’s promises to encourage private sector investment to boost the economy. 

Mupita voiced his concern in a media briefing this week following the release of MTN’s interim results for the six months to the end of June.

MTN reported a 7.1% headline earnings per share increase for the first half of this year, negatively impacted by significant forex losses from the company’s Nigeria operations.

During the briefing, Mupita voiced his concern that the increasingly complex regulatory environment in South Africa could dent the profitability of the telecom giant’s South African unit and harm the country’s image as an investor-friendly emerging market. 

He emphasised the Electronic Communications Amendment (ECA) Bill and a proposal from the Independent Communications Authority of South Africa (Icasa) that will change how mobile numbers are assigned and ‘recycled’ in the country. 

The ECA Bill aims to create a wireless open-access network (WOAN) that will force operators to share their infrastructure and spectrum with third parties. 

Mupita said this would eliminate the competitive advantages gained by operators that have invested heavily in their networks. This would dissuade investment in telecom networks across the country. 

“Our perspective is that some of the requirements in the Bill are very challenging for maintaining a positive investment climate in South Africa,” Mupita said. 

“Operators who have invested a lot of capital must open up their networks and be able to provide these to third parties. That is challenging from an investment client point of view because when you invested, your assumption was that your investment can give you a competitive advantage.”

According to Mupita, such a Bill contradicts President Cyril Ramaphosa’s overtures to the private sector, where the President called on private companies to stimulate investment and grow the economy. 

Icasa has proposed the Numbering Plan Regulations for mobile phone numbers, which aim to prevent the misuse and hoarding of numbers by customers who do not need them and free up more numbers for new customers.

One of the main changes in the regulations is introducing a new rule that deals with the activation, deactivation, and ‘recycling’ of numbers. 

This relates to the ‘churn rate’ – the percentage of numbers customers no longer use within a given period. 

Icasa wants to keep this rate low, so there are enough numbers for everyone who needs them.

The new regulation, therefore, also sets a rule stating that if a customer does not make any calls or send any messages for 20 consecutive days, the operator must notify them that they will lose their number if they do not use it soon. 

The customer will have ten more days to make a call or send a message to keep their number. If they do not do that, their number will be deactivated and quarantined for a month before it can be given to someone else.

Mupita criticised this rule, saying it would inconvenience customers and disrupt their communication. 

He gave the example of a customer who goes on vacation for a month and does not use their phone during that time. Under the new regulations, this customer would lose their number.

Mupita suggested that a better solution would be to extend the numbering range, as done in other countries. This would allow more numbers to be available without having to deactivate numbers that are not being used.

Icasa has yet to make a final decision on the Numbering Plan Regulations. It is still open to public comment, as is the ECA bill.