MTN’s Nhleko urges caution on white paper

MTN interim executive chairman Phuthuma Nhleko has urged government to be cautious in its approach to spectrum policy, warning that the wrong approach could undermine investment and harm consumers.

Phuthuma Nhleko

Outgoing MTN interim executive chairman Phuthuma Nhleko, whose last day as effective interim CEO is on Friday before his replacement, new group CEO Rob Shuter, starts work on Monday, has urged government to be cautious in its approach to spectrum policy, warning that the wrong approach could undermine investment and harm consumers.

Nhleko, speaking on the TechCentral Podcast, said he hopes there will be a “meeting of the minds” between the industry and the government before what’s proposed in the national integrated ICT policy white paper becomes legislation.

The white paper has controversially proposed the implementation of a national wholesale open-access network, or Woan, which will be given access to all unassigned high-demand spectrum — spectrum that is ideally suited for building wireless broadband networks. Under the policy, no existing networks will be given any further access to exclusive-use spectrum.

The proposal in the white paper has drawn sharp criticism from analysts and from the bigger operators, which have warned that it risks undermining a model that has resulted in enormous infrastructure investments since 1994. There is a real risk that if the policy isn’t changed that the big operators, including MTN and Vodacom, will challenge it in court, leading to years of delays.

In the podcast, Nhleko said a big problem for the sector in South Africa, and in many other markets around the world, is that “even though there is said to be engagement between the regulators and the operators, sometimes I do believe that we as the operators don’t convey the fundamental drivers as clearly as we should be conveying them”.

“If you are going to spend US$4bn/year in capex [as MTN does], you want absolute clarity about the regulatory environment — you want to feel that the rules are clear and that you can reasonably chart your own destiny within those rules and not have unforeseen extraneous factors”. More importantly, the rules need to allow operators to “continue to invest”, he said.

“To say a single company (the Woan) will distribute spectrum, it’s [again] all [about] those issues of certainty: how is it run, is it a fair apportionment depending on who can invest and make the returns? That, in turn, has an impact on how rapidly the ICT sector develops.

“Because it’s an ongoing discussion, and I’d hate to be seen to be debating it through the media, all I can say is we are engaging government, we want to create certainty, but in creating certainty, we want to ensure it’s equitable to the investment that we are putting in so we can continue making the investments.

“Whatever construct is arrived at in the final analysis, each operator needs to feel they can reasonably determine their own destiny. When I sit down with investors and say I’m going to invest another $4bn, or in the case of South Africa, R11bn, this is the sort of return we expect. We cannot be in a situation where we can’t answer such fundamental questions. So, I hope there will be a meeting of the minds.”

Nhleko said the issue needs to be resolved “sooner rather than later because we have had extended uncertainty on spectrum, which affects the capex we put in and affects the quality of service that the average person gets”. — (c) 2017 NewsCentral Media

Share this article

  • Nhleko is absolutely right. He is far too smart to say it but I will (I’m not that smart!) Keep the dead hand of government out of deeper involvement. If will stifle all future investment in a sector that has grown brilliantly with light-touch regulation. And this lack of clarity on spectrum has gone on long enough.

  • I agree, to a point. But the status quo is also stifling future investment. We can’t just blame this on government and a lack of clarity. MTN and its peer have a stranglehold on the market that will take more than free market economics to break.

  • That is, as far as I am concerned, one of the few legitimate roles of government – to prevent the rise of monopolies.

  • That’s where the whitepaper debate bothers me. Statements such as from MTN make it seem that this is really just government stifling the environment. That is completely untrue. The networks have been very complicit in holding the market back. The above is really just MTN blackmailing us with a $4 billion investment figure. I don’t see anything about the critical removes the market needs.

  • I don’t understand it that way James. The networks (MTN and Vodacom) made (and continue to make) a significant investment to roll out an infrastructure when the government was wasting time and taxpayers money with Telkom trying to expand a copper infrastructure. If you feel the cell companies are holding ‘us’ to ransom by colluding or unfairly or illegally preventing new players in the game then surely THAT is where government has a role? The free market relies on competition.

  • How familiar are you with the situation around the mobile industry and how we got where we are today? It’s an earnest question: I’m trying to gauge your knowledge and insight 🙂

  • Marcan

    Hmmm, ” light touch regulation” . It was VC and MTN which criminally colluded to increase the interconnection fees also labeled MTRs. Mobile Termination rates from 25 cts per min to R 1.25 per min in 2001, when Cell C got their license.

    Read my comment below : businesslive. co. za/bd/opinion/editorials/2017-02-08-editorial-icasa-your-phone-is-off/

    and the article :techcentral. co. za/the-great-mobile-rip-off/669/
    Remove the spaces after dots, and add www. Duncan doesn’t approve links quickly.

    Gov had still directly 13.9% shares in VC, which it sold in a somewhat hidden deal to the PIC about 2 years back. Indirectly through Tekom it had an even bigger slice in VC. Telkom sold those shares and squandered the money with Multilinks in Nigeria, a failed venture, about ten years back.

    Gov still owns directly 39% of Telkom and and another 12 or 13% indirectly through the PIC. The PIC is run by treasury, and mostly deals with gov employees pensions.

  • James I have replied but as I added links to two videos my post is awaiting TechCentral’s approval.