Auditor report highlights need for regulatory reform and Sierratel’s weaknesses

11 Apr 2019

The Audit Service Sierra Leone (ASSL) has published a report highlighting a number of areas of concern regarding the telecommunications sector, including – amongst other things – the shortcomings of the regulatory structure of the segment, a lack of a level playing field for competition and potential corruption at state-owned Sierra Leone Telecommunications Company (Sierratel). The ASSL’s investigation found that sector watchdog the National Telecommunications Commission (NATCOM) had not developed sufficient regulations to oversee the segment effectively and recommended the development of rules and guidelines covering the following areas: consumer protection, quality of service (QoS), competition, licensing, approvals and inspection of equipment, spectrum and universal services. Further, NATCOM should deliberate and approve all tariffs, charges and penalties levied on telcos, the ASSL noted, pointing out that international gateway charges were increased from USD0.065 per minute to USD0.09 per minute in April 2017 with no explanation for the hike.

On competition, the ASSL found a number of cases where NATCOM had not treated providers equally, for example by allowing different terms and conditions for the payment of 4G licence fees for different operators. Amongst other remedies, the ASSL recommended that NATCOM recover outstanding 4G licence fees totalling USD2.93 million from Africell, USD1.30 million from QCell and USD5.2 million from Sierratel.

Regarding Sierratel, the auditors noted that information covering two loans from Chinese and Indian banks valued at a combined total of USD46.1 million were unavailable, and recommended that the finance ministry ensure that the telco provide auditors with details of ‘the loan agreements, what necessitated the loan, what it was used for and how much is currently outstanding’. Elsewhere, the ASSL found that two members of the company’s IT department had point of sale (POS) terminals – used to top-up customer credit – in their name and could not account for revenue collected totalling SLL33.5 billion (USD3.8 million), equivalent to 24% of the total recharge value of all POS terminals between 1 January 2015 and 30 November 2018. Similarly, the auditors compared the POS recharge values with the amounts collected and banked and found that SLL19.5 billion (around 40% of the total recharge value) could not be accounted for. Discrepancies with recharge cards for CDMA services were also found. The ASSL noted that an earlier internal audit at Sierratel had conducted a stock count of the cards and found inconsistencies with the stock record, with the difference valued at around SLL280 million. There was no evidence of how the company resolved the discrepancy, however. The ASSL’s own investigation found a difference worth around SLL398 million. Finally, the auditors noted that 50 vehicles, worth around SLL2.5 billion and listed amongst the company’s assets in January 2019, were not present and recommended bringing the matter to the attention of the anti-corruption commission.