Market Dominance

Market Dominance Presented by: Barney Harmse a.k.a. “trouble-maker” CEO: INTERNET TECHNOLOGIES GROUP

Background - ITG • ITG - In existence for past 10 years • 170 Employees • Operations and / or Services – 12 African Countries • WTN, inside ITG Group – Operator Status

Historical Case Studies • 0700 SNN (Single National Number) • Traditional dial-up method and costs • New method – SNN, from anywhere in country • 20% discount on local call, from anywhere • I-WAY launched – Nov 2000, only ISP access to SNN • Result – UUNET lost almost 50% of their revenue because not granted access to the SNN – iAfrica / AfOL broke contract… • Birth of the SNN idea….?

Historical Case Studies - cont. • ADSL (a Telecom Exclusive Service) • ADSL vs. Traditional Dial services • AfOL Case Study • M-WEB case study – LAW Suit • Web vs. Telecom Namibia ADSL has been widely published during 2007. • Conclusion – MWEB lost – High Court decision, urgency could NOT be illustrated

International Case Studies • Cost Comparisons…various countries • AfOL – 14 African Countries… • ITG – 12 African Countries… • TELECOM NAM MORE EXPENSIVE

50% Discount – MTC and LEO • Leo™, as a 100% foreign owned operator, has enjoyed similar pricing to MTC of 50% • ITN price of N$ 975,672½ circuit price to Velloorsdrif with no discount @ 11 May 2011 = N$ 975,672 • ITN price of N$ 975,672 ½ circuit price to Velloorsdrif with 30% discount @ September 2011 = N$ 682,970 • Leo™ price of N$975,672 ½ circuit price to Velloorsdrif with discount from May 2007 = N$ 487,836 • ITN still remains 39% MORE EXPENSIVE than leo™ after both parties’ discounts have been applied

50% Discount – MTC and LEO • In the period May 2011 to September 2011– due to not receiving 30% discount as only awarded in September 2011, ITN therefore has lost N$1.7m in cost of sales over a six month period • Over the same six-month period by NOT receiving 50% similar to leo™ and MTC, ITN has lost N$2.9m in cost of sales • To date, from September 2011, after receiving 30% discount, ITN has lost in total N$1.3m in cost of sales • As of its license being awarded on 20 March 2012 and the 50% still not being applied, ITN is losing N$557K per month in cost of sales not being passed therefore calculating to N$6.6m in cost of sales annually

50% Discount – MTC and LEO • National Circuits – more than 2Megs – 50% off • International Circuits – IPLC’s – 50% off • MTC and Telecom Nam – NPTH – yes,maybe? • LEO – 100% foreign owned – why? • ITN in Namibia MOST certainly, more spend with Telecom Nam, more than LEO.

WACS Pricing • WACS is launching commercially end of May 2012 • Wholesale / Operator tariffs- Not forthcoming…why not? • As a direct result, ITG negatively impacted…

Zambia Price Example NAMIBIA KAT LUS Cross-border SOUTH AFRICA SiSH WDH Assuming Lusaka to Sisheke ½ circuit = X Katima to Windhoek ½ circuit then = X + 510%

International Case Studies…

International Case Study • Zambian Market (Section 78(4) of the Act) • Example – Competition in foreign county • To compete - virtually impossible • Telecom Nam National Link Costs and IPLC Price not comparable to neighboring countries • Product and price comparison

South Africa Price Example NAMIBIA JHB ONS WDH SOUTH AFRICA Cross-border VEL Assuming J’burg to Onseepkans ½ circuit = X Velloorsdrif to Windhoek ½ circuit then = X + 933%

National Infrastructure • “ABSOLUTE CONTROL OF NATIONAL INFRASTRUCTURE” • Sharing and / or co-location on national infrastructure • Fiber, • Telephone Poles, • Conduit in the ground, • Unbundling of the “Last Mile” / “Local Loop” connection. • Above examples of NATIONAL ASSETS...

National Infrastructure Angolan Example (NOT EUROPEAN) • DUCT Rental – DEDICATED – 32 mm – U$ 410 • DUCT Rental – SHARED – 32 mm – U$ 360 ….per km per month

SLA’s – Service Level Agreements • Realistic and Comprehensive SLA Agreements are non-existent at the moment… • must be made available as soon as possible, in an effort for Telecom Namibia to take responsibility for the service levels they deliver to the Operators, Namibian Corporate market and Consumer markets.

WHO ARE THE PLAYERS? Determination of the dominant market players • WTN is the ONLYprivately owned 100%Namibian owned Telecoms Operators in Namibia. The points above illustrates clearly the Incumbent’s role as the dominant player, as well as their abuse of this power as the dominant player.

Determination of the dominant market players • Telecom Namibia as the one dominant player will not dare challenge MTC, on any front, since they are also majority Government owned, and is the other dominant operator. WHO ARE THE PLAYERS?

Determination of the dominant market players • Some points (50% discount example) above mentioned also indicates clearly that the two dominant players, who are majority Government owned, are forming a coalition against other players (old or new) in the Namibian ICT industry. WHO ARE THE PLAYERS?

CRAN - The Regulator • Our sincere gratitude and appreciation. • The CRAN team – unbelievable • Stanley Quoted – “Effective Regulator” • The future looks positive

WE THANK YOU

Market Dominance