Econet Takes POTRAZ To Court For Refusing To Let It Charge High Tariffs

Econet Wireless Zimbabwe vs Potraz

A report in the Newsday states that Econet have taken the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) to court as of last month, over $132 million in damages due to losses incurred after the mobile operator was ordered to reduce its tariffs in 2014.

The three items that Econet is claiming against POTRAZ are:

    1. The reduction in tariffs was discriminatory in that it applied the same to Econet as it did to NetOne, TelOne and Telecel, yet Econet had paid the license renewal fees of $137, 5 million in full while the others had not. As a result of POTRAZ’s breach of the license renewal agreement, and, or the terms and conditions of Econet’s license, Econet has suffered damages from loss of profit amounting to $132 670 807 which POTRAZ is liable to pay.
    2. Econet says it was an express term of the license renewal agreement that Potraz would charge and collect from NetOne, TelOne and Telecel the same license fees on the same payment terms that were charged and collected from it.
    3. Econet says it is seeking an order compelling Potraz to disclose the information relating to the Universal Service Fund for which Potraz is the trustee. Econet claims to have contributed over $59 million to the fund from March 2009 to November 2015 and as such it is entitled to a report.

Douglas Mboweni Econet CEODouglas Mboweni, Econet CEO, delivering 2013 financial results

In 2013, mobile networks were due for renewal of their telecoms licences that allowed them to operate, added to Zimbabwe having an election. The Government, in the form of POTRAZ, negotiated with each network as to how that payment would be made. Econet managed to offset monies that it was owed by State telecom companies NetOne and TelOne, thus making it pay $50m cash in the end.

Telecel had even better negotiators, and managed to come out with a 7 year payment plan.

No mention is made anywhere of either NetOne or TelOne making payments towards this 20 year licence.

From this lawsuit, it turns out that the terms and conditions of the licence stated a particular rate at which Econet could charge its subscribers and recoup its investment (we’re guessing 23c/min as that was the rate prevailing before the reduction). The 65% reduction in tariffs was in violation of this agreement and Econet wants to be able to charge its subscribers at the rate it agreed with the regulator when paying for the licence.

Econet has tried to reverse the reduction in tariffs, first with an application to the High Court and subsequent appeal at the Supreme court, then to the Administrative Court (deals with administrative law, like public law which involves disputes with government departments) late last year and lost all cases.