PRIVATISATION AND PRIVATE SECTOR DEVELOPMENT IN LESOTHO
3.5.6 Lesotho Telecommunications Corporation (LTC)
depositor's funds. The financial restructuring of bank has cost the GOL some M612.0 million, of which M15.0 million was used to secure the government's 30 % shareholding in the new Lesotho Bank.
In February 1999, the Standard Bank of South Africa was identified as a strategic partner, and the whole privatisation process kicked-off. Lesotho Bank was privatised in August 1999 by disinvestments of 70% shareholding to Standard Bank with the Government of Lesotho retaining 30% in the new 'Lesotho Bank 1999 Limited.' Fifteen (15%) percent of the thirty (30%) shareho1ding that was kept in trust by government for Basotho was sold to the Lesotho Unit Trust. After this acquisition by Standard Bank, the GOL was relieved of having to inject billions into the bank in order for it to survive and continue with its operations. The Lesotho Agricultural Development Bank was finally liquidated in December 1999. On 2ndAugust 1999, when Standard Bank took over the management of Lesotho Bank, 460 employees were re-employed and the company continued with management of the old bank (Nchake, 2000).
Currently, the company seems to have improved financially as in April 2005 it was reported to have achieved yearly sales turnover of $9,943.30m. Again, the number of staff members has increased to 714. The clients of the bank once again enjoy a variety of benefits from the bank's financial services menu - be it personal or corporate banking, trade or housing finance, or international transactions. The bank is involved in numerous correspondent relationships and strategic alliances with major international banks throughout the world and is increasing its ATM network countrywide, thus further improving availability of banking services to its customers.
the Ministry of Communications through the board of directors. Initially, the company managed to fulfil its tasks such as making telephone connections within the main towns of Lesotho, until it began showing signs of deterioration in service delivery. This was caused by many setbacks which resulted in it failing to provide and deliver services to the public. It became subject to a huge debt of about M56 million. The LTC resorted to the Government to inject some money to finance its operations.
Malieane (2003) raises the point that while in operation, the LTC was able to install 25000 telephone lines for over a period of 20 years, and was faced with a demand for telecommunication lines of about 22 000. That meant it would take it another 20 years to meet this demand. Therefore it was rendered inefficient and ineffective in its operations by the then existing telephone network under which it functioned and this made it unable to support high-speed data transmission and many other services. In 1996, the company was reported to have made a loss of M3.9 million, and the following year, a loss of M12.9 million. On its books, there were 20 000 applicant customers who LTC could not connect and service because of lack of capital and capacity. The need to expand access to telecommunications services, improve the affordability, the reliability and the quality of these services and attract investment into the country prompted the GaL to privatise LTC.
In line with this policy, the Lesotho Telecommunications Authority (LTA) Act was passed before Parliament in June 2000 to establish an independent regulatory authority and LTC was concurrently incorporated under the Companies Act as 'Telecom Lesotho' (TCL) to act as service provider. The regulatory authority is mandated to ensure that TCL and other telecommunications service providers in Lesotho conduct their business in an efficient and productive manner that would protect and serve the interests of consumers.
Seventy percent (70%) of the Government's shareholding in Telecom Lesotho was sold in November 2000 to Mountain Communications (Pty) Ltd and the Government retained 30% for eventual sale to Basotho investors. Mountain Communications was to offer 5%
of its 70% shareholding to an Employee Share Participation Scheme. In December 2002, TCL informed the Privatisation Unit that the board of TCL had approved documentation
of the scheme and the process and registration and implementation was underway. Given the small market size in Lesotho and the poor state of the company at the time of privatisation, TCL has been granted a five years exclusivity period for provision of fixed line telecommunications services. The regulatory authority would monitor TCL's performance against specific targets that have been set, some of which are listed below, and are subject to penalty if not met.
The specific targets are to:
• Provide capacity for at least 40 000 new connections in the first year;
• Connect at least 50 000 new lines in the first five years;
• Ensure provision of at least 1 250 pay phones in the first five years;
• Establish internet access capability in the main commercial centres in the first year; and
• Achieve quality of service to defined minimum standards, which will increase steadily over the first three years.
It is worth emphasizing that during privatisation about 285 staff members were retrenched leaving the company with about 500 employees. LTC was considered to be overstaffed which is strange considering how the work was slow in terms of service delivery. Telecom services in Lesotho have a history of inadequate availability, poor quality and lack of reliability. However, the industry has seen a gradual transformation from a state-owned monopoly for fixed services, to a privatised, privately majority- owned national operator in late 2000 and finally competing in the mobile sub-sector through a subsidiary. Mobile penetration approached 6% in mid-2003 compared with a fixed-line teledensity of below 1.4%. Increased investment from Telecom Lesotho's strategic partners is taking place to reduce the waiting list and increase teledensity. This in tum will foster growth in Internet penetration. By March 2005, Telecom Lesotho had completed installation of Data Network for provision of digital leased lines to cover all major towns of Lesotho. This is meant to extend business and services to all parts of Lesotho.