How MTN profits from its Mswati-protected monopoly
SWAZILAND’S King Mswati III and MTN Swaziland, which is 30%-owned by the South Africa-based multinational mobile service provider, have a lot in common.
For one thing, they are both monopolies: Mswati has the power and MTN Swaziland has complete control of mobile communication and data in the country.
Besides MTN’s 30%, the rest of the Swazi operation is split between the Swaziland Posts and Telecommunications Corporation (41%), Swaziland Empowerment Limited (19%) and Mswati (10%).
This effective monopoly means MTN is raking in hefty profits from Swaziland while citizens pay an arm and a leg for cellphone connections.
MTN corporate affairs chief Paul Norman said the high cost of mobile services in the country were “determined by underlying costs beyond the control of Swazi MTN”.
Internet links, international connectivity and overseas voice-call costs were determined by the state-run telecommunications company and were “well above [Southern African Development Community] and other regions”.
“Ultimately, effective regulation in support of competition is an enabler for companies to provide affordable services in any environment,” he said.
But Mswati has no intention of liberalising the telecoms service. When MTN’s licence expired in 2008, the company, which made an average of R79million a year for six years to 2012 in dividends, tried to sell some of its shares in the company.
In 2009, it offered to sell Mswati 3.5% of its stake in MTN Swaziland. This decreased shareholding would have allowed it to enter the cellular market in its own right. The backlash was swift: Nathi Dlamini, then the company’s MD, was arrested on trumped-up charges and Information and Communications Technology Minister Nelisiwe Shongwe was fired soon after.
The company still tried to go ahead with its mobile operation, but MTN Swaziland took legal action to block it. Initially, the high court ruled in the Swazi company’s favour, but this was reversed on appeal. The case then went to an international arbitrator, which ordered it to shut down its mobile operation because it had tried to enter the market while it still held a 41% MTN shareholding.