Orange Uganda shocking revelation


Written by  Stephen K. Muwambi

Shareholder Tells Court how Orange Telecom ‘Died’ Long ago and it Does not Make Sense Pumping More Money into the Limping Firm

 Orange’s Daniel, inset and co-Directors are sued

In a revelation that is as shocking as it is surprising, one of the Orange Telecom shareholders has revealed the firm has been posting losses ever since it hit town, making injecting more cash to reviving it, a pure silly exercise.

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If this turns out true, then the development mirrors the bad times ahead for the Telecommunication
business. Hardly a month, Warid, which hit the market with a bang, sold out to Airtel, choosing to try a hand at the big money oil sector. Orange has been at pains to grow its subscriber base, but this was
compensated for by its efficient Internet network that is relatively cheap as compared to other players. Owing to the sad financial situation, we can authoritatively reveal, Orange is in the process of
raising its share capital by more than a thousand fold to help clear a bank loan of Shs59Bn, fund it’s 2013 liquidity needs and repay overdrafts amounting to Shs38Bn among others.

This was one key Orange Telecom Board of Directors resolution passed at its February 25, 2013 extraordinary meeting, whose contents we managed to lay our hands on. Daniel Delestre signed the resolutions as chairman while Maximilia Byenkya, signed as Company Secretary.

At the meeting, it was resolved that an extraordinary meeting sits urgently, to consider raising the share capital from Shs2,934,860,000 to Shs262,934,860,000. This is via creating twenty six million shares of Shs10 each, which is perhaps telling of Orange’s bad situation.

But, Hits Telecom, Orange Telecom’s  minority shareholder,  instead rubbishes such rescue moves by claiming Orange has been mismanaged beyond repair, for it to blow another Shs82,082,000,000 on the venture.

Hits Telecom’s lawyers Byenkya, Kihika and Company Advocates have now filed a case at the Commercial section of the High Court, instead demanding that Orange’s majority shareholder Atlas Belgium Services and its appointed directors Daniel Delestre, Gerard Ries, Bruno Bourgin, Michel Berre,
Oliver Froissart, Philippe Luxcey be held responsible for running down the Telecom company.

“Hits Telecom shall aver that as a result of Delestre, Gerard, Bourgin, Berre, Froissart, Philippe’s mismanagement and non-compliance to procurement ethics, Orange has been run in unprofitable manner and therefore a wrong has been done to Orange,” Court documents argue.

Hits also faults ASB for using its majority shareholding and it’s appointed directors, to award fat
contracts to its affiliates, without declaring a conflict of interest, which Hits argues, amounted to a breach of duty of directors to act in good faith.

Hits names ASB such affiliates as France Telecom, which was employed in 2009 to fix a non- functional billing system, but failed miserably, worsening Orange Telecom’s revenue collection problems. Hits Telecom director Ahmed Al Marar says he had on the outset of the marriage, suggested a workable billing system,  but the ASB directors told him to shut up, each time he raised the matter..

“Hits Telecom shall aver that considering the depreciating value of Orange Telecom and the management of the same, it’s neither prudent nor economically viable to invest more money in the company,” reads the plaint.

In fact, Hits Telecom avers, by Orange and it’s ASB majority shareholder raising it’s (HITS) share capital from Shs2.8Bn to more than 82Bn, is a well calculated move for the majority shareholder to push the company out, knowing they had not paid him a dividend on the earlier investment.

Hits boss argue on failure to pay, his earlier investment will be rendered highly negligible, denying him the power to make decisions. Whereas, Hits Telecom KMPG was engaged in 2012 to do an efficiency evaluation of Orange so as to give the Board of Directors an understanding of how Orange was operating, and performing, majority shareholder ASB directors skirted the issue. Instead, the majority shareholders, HITS argues, passed a resolution commission KMPG to instead advise Orange on the issue of price shares in comparison with equity value of Orange on a per share basis and make

Because KMPG was not instructed to advise on alternatives to raise capital, it’s why it considered an increase in share capital, which Hits wants stopped by court and instead ASB and it’s directors be made to account.

As if seeking to cut its losses, Veritas Communication’s Abu Mukasa Muyunga, another minority
shareholder, has also asked to sell their 3,670,283 ordinary shares and leave the marriage.

At the earlier quoted Extra Ordinary meeting, Veritas was allowed to sell it’s shares to Carhegie Klein
Capital Societe Anonyme whose address is given as Pox Box 71, Road Town, Tortola, British Virgin Islands.

The matter has been allocated to Justice Chris Madrama to handle, but that will happen after the sued
party have lodged their defences. They have 15 days to do so, running from the time they would be served with a copy of the plaint and summons.