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Mobile phone networks – corporate identity


Africa is a geographical reality, but the identity of natural persons that claim it has nothing to do with its geography.
Report by Mutumwa Mawere

The mobile phone industry has brought with it new citizens of Africa that play different roles in the value chain.

Before a mobile phone operator can operate legally, it requires a licence that is granted by the regulator setting out terms and conditions as well as duration of the validity of the licence.
The first step before a licence is granted is that the party that applies for the licence must exist at law.

Shareholders like parents bring companies into existence, but they do not own them.

A company is a legal construction that is incapable of being owned, but like human beings, is a vessel through which services and goods can be produced and supplied.

Africa has about 173 mobile phone companies that are licenced operators with 154 of them offering global system for mobile communication services.

Like individuals, companies that operate in Africa also belong to families.

For example, Vodafone, a United Kingdom-registered company has relationships with three African operators and one additional strategic investor, ie Vodacom, a company whose roots are African but 65% of its issued share capital is now in the hands of Vodafone.

Each company that is registered acquires its own identity and is regulated in terms of the laws of the country in which it is registered.

It is incompetent, therefore, to describe a company as a foreign entity when the process of registration is the same irrespective of who holds the shares in the company.

In the case of human beings, once an individual elects to acquire the citizenship of a state other than the one in which he or she was born, the citizenship so acquired is indivisible and, therefore, the rights and obligations are universal.

It is often the case that the parents of a citizen of country X may be citizens of another state, but the holder of the citizenship of country X assumes obligations and rights of being a citizen of that country.

Companies that are registered in Africa, therefore, are all African citizens, but it is not unusual for uninformed people to classify such companies as foreign.

Citizenship gives identity and, therefore, it is an important instrument in giving companies and people who use them as instruments for change to appreciate its value and limitations.

When a question is asked, as it often is about how many mobile phone operators are African, black-owned, or even indigenous, one must appreciate the ignorance that informs not only the question but also the actions that arise from questions of this nature.

Companies have parents and in some instances they also have grandparents.

For example, Vodacom Tanzania’s parent is Vodacom Group Limited and its grandparent is Vodafone.

It would be wrong to conclude that Vodacom Tanzania is less of a citizen than any other company registered in the country.

The success or failure of Vodacom Tanzania, for instance, will be determined by service and the willingness and ability of customers in Tanzania to pay for the service.

The controlling shareholder of Vodacom Tanzania has no contractual claim against the company is as much as the grandparent has a contractual down the value chain.

Before Vodacom Tanzania, for instance, has to declare dividends to its shareholders, it must pay taxes in Tanzania and the company’s directors must be satisfied that the company does not need the money to be distributed as dividends for its own growth.

The relationship between the Vodacom Group Limited and Vodacom Tanzania is no different from that between a parent and child.
If my child, for instance, becomes a billionaire, it does not make me a billionaire as well and my relationship with my child will not allow me to withdraw cash from his bank account without his or her consent.

Although economic nationalism is sweet gospel to confused people, it is often the case that the most vocal voices against foreigners are the very people who have confidence in foreign schools teaching their children at great cost.

Any company that is registered and operates in Africa is, therefore, an African citizen that must enjoy the same respect as all others whose holders of shares may be citizens of other states.
Shareholders have negative rights over the companies in which they hold shares.

They have the power to appoint and remove directors of a company.  The power to exclude is often misunderstood to mean ownership.
Once appointed, a board member has a duty to the company and not to the shareholder.  The company has no voice for its voice is in the invoice. Directors of the company speak for and on behalf of the company.

Directors of Vodafone cannot be said to control the Vodacom group limited in as much as the directors of the Vodacom group can be said to control Vodacom Tanzania, for instance.

Three classes of directors often exist in mature companies, ie
independent non-executive and executive directors.

An independent non-executive director is one who has no connection to the company either in terms of shareholding or contractual relationship of any nature whereas non-executive directors have connections with the companies they serve.

Executive directors are agents of the company they serve and often have a contractual nexus with the company.

The connection between the founder and the company in many situations in Africa is direct.

For instance, Mike Adenuga, the founder and executive chairman of Globacom Limited, is not just the controlling shareholder of the company, but also controls the board.

The 26-year journey of the cellular industry has produced its own corporate governance experience in Africa.

The identity of Telecel the pioneer mobile African phone network with its founders was direct and causal.

The late Miko Rwayitare was known as co-founder of Telecel and control of the company was vested in him and his co-founder Joe Gatt because they were also employed by the company in which they held shares.

Econet is connected to Strive Masiyiwa in as much as Mo Ibrahim was connected with Celtel.

The company’s name and logo give it identity in as much as the names of natural persons give individuals identity that animals in the natural setting do not enjoy.

An individual will typically carry the first, middle and surname.  Without names, human life and experience would take a different meaning.

Companies also need names and some are often associated with founders while others die when founders die and yet others continue in existence after the founders have expired.

Building enduring institutions in Africa will always be a problem and the concept of ownership poses the most difficult challenge, because people generally do not want to share in life and so when they expire, their empires often collapse like a house of cards.
The corporate map of Africa’s mobile networks shows that the dominant logos are foreign controlled suggesting that the promise of local control in post-colonial Africa has been betrayed by the very people who preach economic nationalism.

The industry has been colonised silently, but customers have yet to develop the revolutionary spirit that is often associated with political power.

If the users are not complaining, surely is it fair for political actors to complain on behalf of voluntary market participants?
The industry pays taxes and if one were to put the taxes paid in one basket over the last 26 years, it would be interesting to establish how the funds have been used to promote the interest of customers from whose pockets value is generated.

Africa’s corporate heritage needs to be told so that a new generation of players may find inspiration to be actors.

This century has been dubbed the African century for good cause and the cellular industry has demonstrated that it is not sufficient to rely alone on God’s creation to address challenges of today and tomorrow.

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