Econet switches off government-owned NetOne over US$20 million debt

Econet yesterday announced it has terminated its interconnection services to government owned NetOne in what Econet claims is repudiation of their interconnection agreement.

ECONET in a statement said:”Econet regrets that from Thursday, 23 August 2012, it will have no choice but to terminate all interconnection services it was providing to NETONE under the repudiated agreement. The regrettable effect of this irresponsible decision taken by NETONE on subscribers is that no calls will be possible originating from NETONE and terminating directly onto ECONET as well as calls originating from ECONET and terminating directly into NETONE.”

Econet effected the interconnection domestically and internationally later stating: “ECONET regrets any inconvenience that subscribers will suffer as a result of the termination of services due to NETONE’s unequivocal repudiation of that INTERCONNECTION AGREEMENT. ECONET shall remain ready to reconnect NETONE if NETONE commits to the terms of the existing INTERCONNECTION AGREEMENT, makes a substantial payment towards the historical debt, and commits to meet future obligations on due date.”

According to the notice, NETONE and ECONET had for many years had an agreement for domestic traffic termination between them.

The agreement reached was that each of the operators charge its customers 23 cents per minute (including 15% VAT) for a call to each other’s network. The operator keeps 16 cents per minute and pays the other operator 7 cents per minute.

Econet says prior to the adoption of the multi-currency regime, NETONE settled all interconnection fees due and owing to ECONET but has failed to do so in the multi-currency regime.

Econet says,”NETONE has failed to remit the whole monthly fees due to ECONET since May 2009 to date. NETONE has made payments that are way below what was due from it. The amount due and owing to ECONET as at 31st July 2012 is US$20,412,109 excluding interest.”

Econet says apart from promotional periods, NETONE has been charging tariffs of above 20 cents per minute on NETONE to ECONET calls. Of those 20 cents, 7 cents were supposed to be paid over to Econet. Therefore, for NETONE to accumulate a debt to Econet of $20 million, it must have billed in excess of $58 million to those of its subscribers calling ECONET subscribers.

The firm now claims that the NetOne’s failure to honour the agreement shows not only NetOne as irresponsible but is a dishonest partner.

Econet says it has tried on several occasions to solve with NetOne’s management at all levels. Econet therefore has rendered NetOne ill prepared to honour its obligations under the agreement.

In the public notice,Econet says it engaged the Regulator, POTRAZ, and relevant government ministries including the ministry of Transport, Communications and Infrastructural Development and the Ministry of Finance and The Zimbabwe Revenue Authority but all ended up as futile efforts.

A July 2010 court case is in addition still pending judgement.

Econet however did not just want to cut off NetOne subscribers.

In June 2012, NETONE came out against ECONET arguing that there was no such INTERCONNECTION AGREEMENT between it and ECONET and therefore the NetOne owed nothing to ECONET.

According to the public Notice, NetOne again wrote to ECONET on 3 August, 2012 about its lack of “obligations to Econet with regards to interconnection fees because it has no interconnection agreement.”

ECONET says it considered this communication as repudiation of its agreement.

ON 17 August 2012, Econet formally advised NETONE that it accepted the repudiation and it would withdraw all services that were being extended in terms of the agreement it had repudiated.

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