Big news stories in 2012
2012 has been a turbulent year with a lot of news passing through our doors – from acquisitions, to stock crashes, product lauches to court battles.
But looking at the South African tech sector, these are the stories that have stood out as a perpetual source of intrigue and ongoing interest.
MTN Irancell saga
MTN, The Fish, and Project Snooker – like a story out of spy fiction, this year MTN got pulled into a highly controversial saga where the South African Mobile operator stood accused of using under-handed methods to bribe its way into the Iranian market.
Making the accusations was Turkish mobile operator, Turkcell, which filed a complaint in US District Court of Columbia, Washington DC, against MTN Group, demanding $4.2 billion in damages over the award of the cellular licence in Iran in 2004.
It said that MTN paid Iranian Deputy Foreign Minister, Javid Ghorbanoghli, $400,000 in US dollars for his efforts to politically undermine and destroy Turkcell’s position as the license-holder, and to deliver the license to MTN.
It added that, in June 2005, MTN promised, and later paid, the South African Ambassador to Iran, Yusuf Saloojee, the equivalent of US $200,000 to help MTN deliver on the nuclear vote and weapons trafficking, and to support MTN within the Iranian government.
In the months following the news breaking, MTN remained firm in its stance of innocence and established the Hoffmann Committee to investigate all allegations, while the South African government suspended Saloojee until investigations into his links to the MTN deal have been concluded.
The US courts have put the case on hold, while MTN expects the Turkcell claim to be disposed of. The case is expected to reach a conclusion by the end of June 2013, but remains an ongoing point of interest.
Cell C goes to war
In January 2012, Cell C announced that it was appointing former Vodacom CEO, Alan Knott-Craig Snr as its new chief executive – and Knott-Craig took up the position ready for a fight.
Even before starting on the 1st of April 2012, Knott-Craig was vocal about his intentions to shake up the local mobile landscape, targetting 25% market share and promising to “change the old rules” of the cellular environment.
The rules which Knott-Craig was referring to were not around the regulatory environment in South Africa, but rather the way contracts are structured; billing is done; and how distribution channels are managed.
When he took over as CEO – Knott-Craig delivered, changing Cell C’s business strategy to introduce simplified packages at aggressively competitive rates which undercut competitors, Vodacom, MTN and 8ta at almost every turn.
With its new strategy, Cell C was releasing new deals and promotions almost weekly – targetting international rates, voice calls and data prices on all fronts.
The strategy helped boost Cell C to 9.4 million customers, with the operator reporting in September that it was signing up 700,000 new subscribers each month.
Telkom’s troubles
Telkom has had a year to forget in 2012, with the company going from bad to worse as investors bail on the struggling encumbent at every turn.
Telkom’s big news for improvement in 2012 was a deal between Telkom and Korea’s KT Corp, which would see KT potentially acquiring a strategic equity shareholding of 20% in the post-issue ordinary share capital of Telkom.
In June, the South African government blocked the deal, with communications minister Dina Pule saying that KT Corp’s offer for a 20% stake in Telkom was too low to meet the group’s needs.
The decision by government set ablaze rumours that Telkom – which is already partly owned by government – was headed for nationalisation, which sent investors scrambling.
Adding to its woes, Telkom was also hit with a R449 million fine from the Competition Tribunal for abusing its dominance in the telecommunications market between 1999 and 2004 – a period in which Telkom was a monopoly provider of telecommunications facilities.
With a lack of funding, a declining fixed-line business, a struggling mobile arm, millions owed in fines, and a mass executive exodus – Telkom’s troubles in 2012 were plenty, putting a cherry on top of the tremulous 4 years which have seen the company’s value decline by a whopping R60 billion.
The race to LTE
2012 saw the first commercial launch of long-term evolution (LTE) cellular technology in South Africa – an honour held by Vodacom, which went live with the service at the 2012 MyBroadband conference in Midrand.
While Vodacom was first to market with their offering, MTN has also since launched LTE – while other competing operators, Cell C and 8ta, are both engaged in live trials of the next-generation mobile technology.
The biggest surprise surrounding the launch of LTE this year came from the fact it happened at all – and so quickly.
The roll-out of LTE technology is highly dependent on available spectrum. In South Africa, the independent communications authority of SA (Icasa) is in control of the avaialable spectrum – and the spectrum allocated for LTE technology has, to date, still not been made available for use.
In March, research and analysis firm, Frost & Sullivan, based off of the continued delays in allocating this spectrum, predicted that LTE would probably not land in South Africa until 2015.
By refarming the spectrum they have available, operators in South Africa have side-stepped policy snafus and pushed ahead with their network developments, launching LTE in the country in spite of delays.
E-tolling
While only of concern to commuters in the greater Johannesburg area, the ongoing e-toll saga (which affects millions of people in the city) has certainly grabbed media attention throughout the year.
Initially set to launch in April 2012, the controversial e-tolling system was put on hold through an 11th-hour interdict which stopped Sanral from implementing and collecting tolls.
The case was brought to the High Court by the Opposition to Urban Tolling Alliance (Outa) – a group founded by industry players who would be impacted most by the e-tolling system.
The biggest controversy surrounding the system was to do with the collection of fees which accounted for about one-third of the total cost. That means that only around two-thirds of the money paid by motorists would go to road building and maintenance costs. The rest will go to collection of the fees.
The interdict was overturned by the constitutional court in late September, though the entire system continues to be faced with opposition from commuters, businesses and trade union, Cosatu.
In mid-December, the Pretoria High Court ruled against Outa, giving Sanral the all-clear to launch the system.
There is no established start date for the e-tolling system, though it is not expected to be implemented until early 2013.
Related articles
MTN, The Fish, and Project Snooker
I will change the rules: Alan Knott-Craig
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