Confirmed: Libyan investor pulls out of Uganda Telecom, Govt takes over

Telephone House

Ucom, the Libyan majority shareholder in Uganda Telecom (UTL) has notified the Ugandan government that they will no longer fund the company and with immediate effect directed the resignation of its five representatives on the company’s board. This has forced the government to take over the affairs and management of UTL with immediate effect and will engage Ucom to ensure orderly transition. Ucom is a subsidiary of LAP Green Network (LAPGreenN) wholly owned by the Libyan government.

According to the press release, from the ministry of Finance, Planning and economic development, the government has assured UTL customers, stakeholders, and the General public that they should rest assured that the company will remain operational with full support of the government.

In 2013, following lifting of UN sanctions on Libya, the Majority shareholders resume control of the company and subsequently transferred the beneficial ownership of Ucom’s shares from Libya Investment Authority to LPTIC. Since 2014, the shareholders engaged in protracted on modalities of capitalizing the company. As the government was still studying the turnaround strategy that has been approved by the shareholders when Ucom broke the news of pulling out of UTL.

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Ucom has been responsible for management of the company since 2006 with a majority 61% and government of Uganda having 31% and at the time invested over $26.4 million as additional equity to finance the network upgrade and expansion. However since 2007, Uganda telecom has been characterized by heavy indebtedness a heavy decline in market share and losses. This was due to inadequate investment, tight competition from carriers like MTN and Airtel and a network that seems to have been rolled out in the middle ages.

Due to political turmoil in Libya, by 2011 Ucom was unable to downstream capital to the company since it’s assets were frozen by the UN sanctions.

During recent probe by the parliamentary committed investigating the state of the failing network, it was discovered that UTL accumulated both local and foreign debt amounting to UGX 128 billion. It owes the tax body URA UGX 58 billion, UGX 8 billion to MTN Uganda, UGX 22 billion to UCC, UGX 16 billion to NSSF and Huawei Technologies a tune of UGX 24 billion. The committee then issued a directive stopping the company from doing any further financial transactions until audited reports dating back from 2000 are presented.

The government still believes that UTL is of strategic importance to the country has taken over its management fore the following three core reasons.

  1. Uganda Telecom is a key provider of fixed lines services and data to Government Ministries, Departments and Agencies.
  2. It directly employees over 500 Ugandans and more indirectly as service providers
  3. It has paid about UGX 217 billion in taxes and UGX 53.3 million in regulatory fees to Uganda Communications Commission (UCC).
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