CTC goes after Econet

Econet believes its being victimised for its success

Econet believes its being victimised for its success

Tinashe Makichi Business Reporter
The Competitions and Tariffs and Commission has started gathering information, which may result in a fully fledged investigation on alleged uncompetitive behaviour by Econet Wireless.
CTC has arranged a meeting with Econet officials to ascertain the facts around the allegations for them to develop a background position of the challenges they are being accused of by various business entities.

The commission will engage the Reserve Bank of Zimbabwe and the Postal and Telecommunications Regulatory Authority of Zimbabwe as regulators of banks and mobile network operators to better understand the regulatory issues around mobile money business.

“We are making preliminary investigations on allegations levelled against Econet Wireless of its uncompetitive behaviour on the telecommunications side.

“The commission is still establishing facts and doing interviews with complainants who have levelled allegations against Econet,” a source who could not be named for professional reasons said.

Various entities have raised complaints against Econet, alleging that the mobile network is involved in uncompetitive behaviour and monopolistic practices.

In the forefront has been the banking sector, which has raised issues with Econet with regards to the opening up of mobile banking streams and a directive that all suppliers to Econet have to have an account with Steward Bank.

Econet clashed with banks after it agreed in February 2014 to connect banks onto the USSD platform for other value added services but ended up creating a separate USSD to EcoCash for banks in particular for mobile money transfer services.

The implications for setting up a separate USSD for banks were that Econet would be able to charge banks a separate tariff which is much higher than the prevailing SMS charges and also much higher than what Econet is charging those who are hooked onto EcoCash.

This is viewed as an unfair trade practice as it is designed to make banks’ mobile money transfer services uncompetitive in comparison to Econet’s own product. The tariff is also significantly higher than what other mobile network providers are charging for a similar service.

Banks feel strongly that being put on a separate USSD platform to EcoCash would enable Econet to disconnect banks without inconveniencing its clients on the EcoCash platform.

“Econet can throttle or stifle that service in violation of any service level agreements that may be in place because of its immense power,” the source said.

Banks are of the opinion that the proposed charge of $0,30 was too high given that an SMS was currently costing less than $0,05.

Banks felt the charge was too high and was meant to be expensive for any product that the banks would want to provide.

Meanwhile, the High Court will soon make a determination on allegations levelled against Innscor Africa Limited by the CTC.

The allegations stem from Innscor’s acquisition of a controlling stake in the country’s largest miller, National Foods Limited.

Innscor increased its shareholding in Natfoods to 49,9 percent from 36 percent between 2003 and 2011.

The company subsequently reduced its shareholding to 37 percent after disposing off 11 percent for $11,7 million — to Tiger Brands of South Africa in 2011.

CTC assistant director (Competition) Mr Benjamin Chinhengo confirmed the development to The Herald Business.

“The case is now under the jurisdiction of the High Court and a ruling is expected anytime soon then we can furnish you with more details,” said Mr Chinhengo.

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  • Kasukuwere

    Rather than penalising innovations that allow more freedoms and simplify access to facilities for the general public, shouldn’t the laws be preferably modified to create even more potential innovation and creation of opportunities, instead of supporting obsolete structures and services provided by those unwilling to modify and adapt their ancient prestations?
    In this modern fast evolving technological world, as in nature, natural selection eliminates the weakest link and imposes extinction following precepts of survival of the fittest.

    • Is Econet Evil like this?

      Finally, CTC wakes up.
      Econet charging 30cent per message is just away of denying banks to use the USSD service. In South Africa, mobile network operstors charge a similar service $0.02 (2 cents) per message. In Nigeria, the charge is again 2 cents per nessage.
      By the way, Strive Masiyiwa has a mobile money project in Nigeria where he doesnt operate a network. He is charged 2cents per message there. Why does he want to charge banks 30cents in Zimbabwe. Is that not evel.
      Why doesn’t Potraz regulate these charges anyway?

      • Donhodzo

        In South Africa we are being charged 80SA cents equal to 8 US cents per txt check your bank charges

    • Tato

      You are missing the whole point Man. This is Competition policy its about creating a fair rivalry among companies and that will ultimately work to consumers advantages and result in economic growth. Its actually good that CTC is undertaking such investigations.

      • Donhodzo

        Why would you want competition to be one sided when the government is not being competitive. Teachers are about to be paid 9 months out of 12 in a year is that fair?

  • KuraiMGT

    Why cant the complainants use texta cash and netcash. If one product is expensive, buy the cheaper one, rather than force the seller of the expensive product to reduce price. Unless of course the buyer and seller know the premium in the expensive product, on which case they should simply live with it, rather than starting this competition circus

  • Progressive Zimbabwean

    Banks and the rest who are not prepared to accept new ways of doing business must just wake up and smell the coffee. Punishing innovators and choosing to align with those of us who are not adaptive will not get us anywhere. If these guys cannot survive in the jungle then let the law of the jungle prevail.

  • fc

    The basis of investigation is just but stupid, Eco is looking at unlocking all the chains of bondage which have over the years stalled the movement of cash and info. It is high time those who hv nothing NEW to offer should reconsider their existence. Go out there and compete.

  • Tamuka

    vari kunyanya kurwira chiiko???

  • Nays

    The problem with Zimbabwe is that our leaders are out dated and they will never appreciate innovations and instead, they will try by all means to crush anyone who goes ahead of the pack. Econet, is the most innovative service provider in Zim and thats the only reason why people flock to it. If you are innovative, you will come up with ways of doing business that are cost effective as in the case of Econet and opposed to Netone and Telecel and all the banks. Offering lower prices because you have less overheads is not crushing competition, but offering cost effective services to the consumer. We are still struggling with a slow network whereas some countries are already on LTE and 4G and seeking how to get better isu busy kwachu kwachu zvakanaka zvirikuitwa ne Econet. When are we going to have 3GB of data for just R149 in Zim, when are we going to have free airtime with every purchase of equivalent value airtime. When are we going to have networks that never drops calls? Dai pasina ana Econet, dai tichiri kungomira mazi queue ema sim card nanhasi.

    • Donhodzo

      And to add on Econet was always a threat to the Gov before it started operating hence they will always try and shut it down

  • Cellphone user

    Honestly I don’t understand all this can’t the banks get off their rusty dusty and do something on their own,like establish own network system or something ?or even join other network providers like net one or telecel and live these econet “Bullies”.Can someone clarify why the banks can’t do their own thing,besides the legal or unconstitutional jargon

  • Oskido

    Kasukuwere you dont know what you are talking about stick to arming.Econet stiles opponents.

  • udhogo

    Maybe my comprehension skills are not with me. Last time the banks wanted a separate platform from Ecocash for their mobile money now they want Ecocash. Which is which?

  • shiku

    First Econet never complained about exorbitant bank charges which the banks are enjoying. If banks dont like econet prices there are free to start their own mobile telephone company or go to other service providers. The fact that banks can get better deals somewhere else means econet is not breaking any competition laws. In a free market economy expensive goods and service providers go out of business. Why is the government interfering here?

  • shiku

    Individual who are charged $0.05 per text do not make money us from the text messages they send. Banks want to make profits at the expense of Econet. Their text messages would be for business purposes and so should be charged high prices.