MTN and Vodacom in row over multi-million rand Transnet tender

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JOHANNESBURG – Mobile network giants MTN and Vodacom are entangled in a fresh row over a multimillion-rand cell phone and data tender at state-owned freight and rail transport company Transnet.
MTN will square off with over Transnet following its refusal to port (switch networks) nearly 13 400 sim cards to Vodacom.
The matter is heading to the South Gauteng High Court where MTN will argue that its contract with Transnet is still valid and binding as there is a clause that prevents the state-owned entity from procuring the service from a competitor.
The court battle comes as Vodacom is currently under investigation by the Competition Commission for anti-competitive behaviour over the R5.2-billion contract awarded to it by the National Treasury in 2016 for 20 government departments with the highest telecommunications spend.
Vodacom beat MTN, Telkom and Metro Lifestyle to be awarded the lucrative contract which the Treasury estimated will save the government over R3.44-billion.
Africa’s biggest telecommunications firm MTN is angry over Transnet’s decision to award the contract to its competitor Vodacom allegedly in breach of their agreement.
MTN has ignored an April 25 decision by the Independent Communications Authority of SA’s (Icasa’s) complaints and compliance committee ordering it to port the numbers as its refusal was negatively affecting and severely compromising Transnet’s 65 000 employees in discharging their duties.
In a letter dated May 3, Icasa chairperson Rubben Mohlaloga gave MTN seven days to port the numbers to Vodacom.
Transnet spokesperson Molatwane Likhethe said MTN has only ported 5 537 numbers for porting against a total of 12 000 sim cards and blamed suspended accounts on some numbers, account type and contract details mismatch and missing account numbers.
Among the reasons MTN gave for refusing to port the sim cards was that Transnet owed it about R40-million.
MTN complained to Transnet’s procurement ombudsman after it was disqualified during the adjudication of the tender for failing to failing to comply with the requirements.
While the ombudsman was still investigating MTN’s complaints, the company filed an urgent application to interdict Transnet from awarding the tender pending the finalisation of its bid to have the contract reviewed and set aside.
The ombudsman dismissed MTN’s complaints and found that Transnet acted lawfully and recommended that it proceed with awarding the tender.
MTN’s Jacqui O’Sullivan did not respond to Independent Media’s questions sent on Thursday.
South Africa’s biggest mobile networks have the bulk of the share of the local market and have often clashed over lucrative government contracts.
Vodacom beat MTN in the final round of the adjudication of the R5.2-billion contract based on functionality requirements after Telkom and Metro Lifestyle were eliminated, according to documents seen by Independent Media.
The commission’s Sipho Ngwema said the probe into Vodacom was continuing and that a public announcement will be made once it is concluded.
In its 2017 annual report, Transnet announced that placing limits on its discretionary costs which include telecommunications resulted in a R2.4-billion saving in planned costs.
Documents show that with the contract awarded to Vodacom, Transnet wants to benefit through reduced cost of acquisition, improved service, strengthened overall competitive advantage.
In 2014, the Eastern Cape High Court reviewed and set aside the awarding of a R30-million contract to MTN for the provision of mobile voice and data services to the Nelson Mandela Bay Metro.
Vodacom was among the unsuccessful bidders and joined forces with the municipality to get the awarding of the contract to MTN reviewed and set aside due to irregularities in the procurement process.
Transnet’s contract to provide mobile voice and data services lists dozens of expensive smart phones in its specifications including Apple iPhone 6 and 7, iPads, Samsung S7, S6, Note 5, Galaxy Tablets as well as Sony, Nokia Blackberry devices, among others.
The contract is for three years with an option to extend for another two years.
Transnet’s Likhethe defended the procurement process that led to Vodacom being awarded the contract.
”MTN was fairly disqualified as they failed to meet some of the mandatory requirements of the mobile voice and data services request for proposal,” said Likhethe.
He denied MTN was owed R40-million, saying MTN took all its issues on its refusal to Icasa and was rejected and ordered to port.
Vodacom’s Byron Kennedy said MTN has not fully complied with Icasa’s order.