Government takeover at troubled Uganda Telecom

Jason McGee-Abe
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Uganda Telecom Limited (UTL) has been taken over by the government after the telco’s 61% majority shareholder said it would no longer fund the indebted operator

Uganda’s finance minister, Matia Kasaija, announced the government takeover in a press statement yesterday. Ucom, a subsidiary of LAP Greencom Networks, which itself is a subsidiary of Libya Posts, Telecommunications and IT Company (LPTIC), informed the government that it “will no longer avail funding to the company” and it has “directed the resignation of all five representatives of Ucom on the UTL Board”.

“The government has decided to take over the affairs and management of UTL with immediate effect, and will engage Ucom to ensure an orderly transition,” Kasaija said in a press statement yesterday.

“UTL customers, stakeholders and the general public should be rest assured that the company will remain operational with the full support of the government.”

According to the statement, the government considers UTL to be of “strategic importance” as it:

- Is a “key provider of fixed-line services and data to government ministries, departments and agencies”;- Employs over 500 Ugandans directly, and thousands more indirectly as service providers; and - Has paid approximately UGX 217 billion in taxes and UGX 53.3 billion in regulatory fees to the Uganda Communications Commission (UCC), between 2006 and 2017.

The news comes at a time that Ucom is being investigated by Parliament for alleged poor management, heavy indebtedness (local and foreign debt amounting to UGX 128 billion), decline in market share, non-payment and fraud.

In 2006, Ucom shareholders made a capital call of $26.4 million as additional equity to finance a network upgrade and expansion. As a result the government agreed to reduce its shareholding from 51% to 31%.

From 2011, Ucom was unable to downstream capital to the company owing to the political turmoil in Libya and UN/EU sanctions on Libya that affected the majority shareholder’s assets, which were frozen.

UTL will need a big capital injection to turn around its fortunes. GTB