Vodafone Uganda Goes Bankrupt

AFRIMAX Uganda Limited the parent company of Vodafone Uganda has declared insolvency and an administrator has been appointed.

According to sources in the telecom industry, Donald Nyakairu has been appointed the administrator and individual creditors have been asked to verify their credit positions with the Vodafone Uganda with the new administrator.

Nyakairu is a managing partner at the law firm ENS Africa Advocates.

The administrator will hold a meeting with the company’s creditors on March 1st 2018 on which day more information will be provided to those who demand money from Vodafone Uganda.

Vodafone going into receivership follows reports last month that the company had failed to break even, was failing to meet its obligations with creditors and was bound to go out of business sooner rather than later.

The rumours were sparked off around Christmas time when the 4G network without warning lost its signal around Kampala causing massive outrage among their customers who took to social media to vent their fury.

It later emerged that the company had failed to meet its obligations with its tower mast service suppliers who had gone ahead and switched off their gadgets plunging Vodafone into the dark and off air.

Vodafone confirmed this in press release on January 17, 2018 when it admitted to having challenges and apologized to its customers:

Vodafone Uganda would like to apologize to its customers for the deterioration in the quality of our services of the last few weeks. This has been caused by transmission outages at a number of our network sites. We cannot immediately ascertain how long these challenges will persist but we are working closely with our partners to restore these sites back to full service as soon as possible.

Vodafone troubles were further fueled when it was reported late in January that the company was disposing off its assets including Point of Sale computers, company vehicles, office desks and closing several outlets and not renewing rent.

It was also reported that Vodafone had summarily terminated the contracts of all its Brand Ambassadors in universities across the country without paying them salary for 3 months.

The campus ambassadors were said to be numbering over 150 and were working on customer recruitment, engagement and retention in the volatile youth segment, which according to industry experts, is the biggest consumer of telecom data in Uganda.

However on February 1oth Vodafone announced how it had resolved its ‘issues’ with the tower mast operators and announced the full restoration of their 4G network signal.

Vodafone took to twitter to announce:

‘Vodafone Uganda is pleased to announce the full restoration of their 4G network signal. To demonstrate our commitment to our customers over the course of next week, we will reimburse any unused data.’

The validity of the claim that normal operations had been restored, was however put into doubt when customers intending to purchase from Vodafone shops were repeatedly being turned away by staff telling them ‘system down.’

The collapse of Vodafone Uganda call into question the viability of small operators in the highly competitive telecom market in Uganda.

Former MTN CEO for Uganda Themba Khumalo in 2014 called for consolidation in the telecom market in order for the industry to grow and be sustainable saying the number of operators were too many for all of them to be profitable and efficient.

Khumalo told Reuters in an interview at the time that; “The state of equilibrium could be around three operators running effectively and competing effectively in the marketplace to help grow the economy of Uganda.”