A fortnight ago, we reported that huge debts were threatening to sink struggling Uganda Telecom Limited (UTL).
Now Uganda Communications Commission (UCC), the regulator of the telecoms sector has written to the oldest telecom firm in the country, warning it of impending closure.
In a letter dated March 30, which UTL acknowledges having received, UCC communicated its intention to revoke the license of UTL over its failure to improve its quality of service and reneging on commitments to pay for interconnection fees among other things.
The telecom regulator said if the said issues are not exhaustively explained, it would revoke the company’s license in 60 days.
UCC Executive Director Eng. Godfrey Mutabazi in an interview confirmed writing to UTL, saying,
“We have written to UTL for 3-4 years. There has been a consistent report from their own auditors that their debts outstrip their assets. They have not been paying interconnection fees which affect the quality of services and operation of the whole industry. So it is upon this guideline that we qualify to give them notice where they will make a presentation and if it’s not satisfactory their license will be revoked.”
In response, Stephen Kaboyo, the UTL Chairman said “Uganda Telecom here to stay”, adding that “It is true we have regulatory challenges that centre around capitalization issues. However I must say that the shareholders i,e LAP Green and the Government of Uganda are working together to stabilize UTL, reverse the causes of distress, resolve the financial problems and return the company to acceptable levels of solvency, liquidity and profitability.”
He added: “Our job at the moment is basically to create conditions to establish UTL’s credibility in the sector and regain stakeholder support. In order to achieve this and walk the path of sustainable recovery, we shall need the support of our stakeholders that include our subscribers, regulator, shareholders, creditors and staff….I can therefore state with confidence that UTL is not beyond redemption, UTL has enormous potential, with a bit of tweaking here and there we shall be able to make the turn and bring the business back on a sound footing.”
He added that as they have always done in the past, they “shall continue to engage with UCC, and address their concerns. In my capacity as the Chairman, I can mention that we have had excellent working relationship with UCC.”
UTL Manager – Brand and Communication, Regina Busingye Corry said “In the last two published UCC surveys, UTL’s QoS (Quality of Service) for most parameters was above UCC requirements. UCC has the right to issue notices to operators under the Communications Act. They have been doing so to other operators lately as well. The operators have the right to respond back to clarify their position and advise UCC on how the issues will be sorted. In our opinion, there is no revocation of license discussion as at this time.”
Source of Trouble
The company has faced administrative issues ever since the United Nations sanctioned it a few years ago, a development that has seen the once popular telecom firm shrink in performance as subscribers slowly give up on the brand.
Additionally, the firm has been struggling to meet a number of financial obligations for quite some time. In an effort to cut on company expenditures, Ali Amir, the outgoing Managing Director, who was allegedly forced to resign over mismanagement, laid off 100 employees. At that time, the company was sitting on a US$70M debt. This however couldn’t stop telecom giant MTN from seeking for its unsettled interconnection fees.
In 2011, MTN Uganda threatened to block calls to Uganda Telecom over a UShs20bn unpaid interconnection fees that had accumulated over a three-year period. Additionally, Airtel Uganda also claimed that UTL owed it Ushs8bn in interconnection fees and had also threatened to terminate calls to the network. Inside sources say a number of suppliers including banks and media houses are demanding UTL huge chunks of money in debts. A few months ago, Court of Appeal ruled that UTL should pay their rivals MTN UShs6bn as interconnection fees.