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Telecoms Firms Express Disappointment Over Sona Speech

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The telecommunications industry is expressing their concern over the apparent disregard for their request to receive diesel rebates. This issue arose after President Cyril Ramaphosa failed to address the topic during his state of the nation address last week. The industry is worried about the implications of this oversight.

Operators like MTN, Vodacom, and Telkom collectively invest billions of rand annually to sustain the operation of their base stations during load shedding, primarily by purchasing diesel. This expenditure ensures uninterrupted connectivity for their customers even in times of power outages.

The Association of Comms & Technology (ACT), an industry body, made a formal request to the national treasury last year, urging the introduction of a diesel rebate specifically for the ICT sector. 

Following President Ramaphosa’s speech on Thursday, ACT CEO Nomvuyiso Batyi has raised concerns about the omission of diesel rebates. There is a worry that this exclusion from the president’s speech may indicate that diesel rebates will not be included in this year’s national budget.

According to Batyi, similar rebates have been granted in the mining, agriculture, and food processing industries. In fact, during last year’s State of the Nation Address, the president mentioned rebates for food processing before it was officially confirmed in the budget speech by the treasury. However, this year, the president did not address any rebates for the telecoms sector.

ACT’s argument for the rebate is based on the rationale that it is illogical for mobile operators, who rely on diesel to power their communications infrastructure during load shedding, to be burdened with taxes incorporated into the fuel price.

Rebates

Contributions towards the Road Accident Fund and the general fuel levy are among the areas that can be improved. These contributions are essential for road maintenance. The agricultural, forestry, and mining sectors have already been granted rebates under the Customs and Excise Act, and ACT believes that there is no reason why these rebates should not be extended to the ICT sector.

In the midst of the worst year of load shedding in 2023, mobile operators are sparing no expense to ensure the continuity of critical infrastructure. Vodacom Group CEO Shameel Joosub revealed in a July 2023 interview with TechCentral that the mobile network operator had allocated a staggering R350 million towards diesel expenses in the previous financial year. Following suit, MTN announced in October that it would invest between R4.5 billion and R5 billion to combat the effects of load shedding, with a portion of the funds allocated to batteries, generators, and diesel.

Power outages have continued to present a significant obstacle to our operations,” stated Charles Molapisi, CEO of MTN South Africa, in an October press release. He further explained that during the first half of 2022, there were 68 days affected by load shedding. However, this number dramatically increased to 181 days during the same period in 2023.

Despite network operators investing more money in backup infrastructure, they continue to encounter challenges in safeguarding it against theft and vandalism. Data collected by ACT indicates that criminal elements play a role in sabotaging critical infrastructure, and their operations are characterized by organization and sophistication.

According to Batyi, the destruction of infrastructure in South Africa is not limited to just our members; it is also evident in the electricity, rail, and water sectors. However, the government seems to lack a coordinated effort to address this issue. This observation highlights the urgent need for the government to take action and protect our country’s vital infrastructure.

In his Sona speech, Ramaphosa’s mentions of the ICT sector were primarily focused on past achievements rather than future prospects. While Batyi acknowledged that the president’s references to changes in the spectrum licensing regime were seen as successes by the telecoms sector, particularly due to the resulting decrease in data prices, she expressed disappointment in Ramaphosa’s failure to address the current issues plaguing the industry.

Batyi expressed his concern that connectivity, which he believes is a fundamental human right, is not being prioritized by the government.

 

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