Fight looms over takeover of UTL

Origin of LPTIC’s woes

UTL troubles have persisted for some time because after Gadhafi’s ouster, there is no clear leadership in Tripoli.

For instance, Gergab, who has been negotiating with the Uganda government is allied to the internationally recognised Libyan government in Tobruk.

But this government has been challenged by National Salvation Government based in Tripoli. What this means, according to some observers, is that LPTIC’s control over Libyan assets might be only on paper.

Only in August 2015 did the interim government announced that Libyan-owned telecoms companies in sub-Saharan Africa which were previously under the Libyan Investment Authority (LIA), and managed by LAP Green Network would be consolidated under LPTIC.

The decree affected GreenN (Cote d’Ivoire), Uganda Telecom Ltd (UTL) and GEMTEL (South Sudan).

It is also not only in Uganda where the Libyan government has failed to keep their telecom firms afloat following the turmoil that engulfed Libya.

In 2013, Rwanda forced the liquidation of Rwandatel after a Libyan government-affiliated company, LAP Green now under LPTIC, which had acquired 80 % shares, failed to salvage it from enormous debts and improve its services as it had been wished by the Rwandan government.

LAP Green had acquired the company in late 2007 after agreeing to pay $100 million to the Rwandan government and improve Rwandatel’s services in the country.

This followed Zambia, which repossessed Libya’s 75 % stake in Zamtel in 2012 claiming that the transaction under the previous government headed by Rupiah Banda conducted two years earlier was illegal.

Zambia sold a majority stake in Zamtel to the Libyan operator for $257 million.

In Uganda, LPTIC’s latest trouble was first orchestrated by Budadiri West MP Nandala Mafabi who tabled a petition in Parliament on November 17, 2016,  stating that its subsidiary UTL was  bleeding financially in local and foreign debts amounting to Shs128 billion.

Some of the claimants the legislator said includes Uganda Revenue Authority which is owed Shs58 billion, MTN Uganda Shs8 billion, Uganda Communications Commission’s Shs22 billion, and Huawei Technologies that is owed Shs24 billion.

Mafabi also accused top managers, including the Managing Director, Chief Human Resource Officer, Chief Legal Officer and Chief Finance Officer of earning a total of Shs420 million per month, which is a third of the salary bill of its current workers.

This prompted the Speaker of Parliament Rebecca Kadaga to constitute a seven-member Select Committee chaired by Okin Ojara, the legislator for Chua West  to investigate the management and operations of UTL, determine its economic value,  and also advise on whether government should continue holding shares in the company.

It appears behind the government move is to eventually hand UTL to another investor. That possibly explains why the government was not welcoming to a new business plan involving LPTIC.

Finance Minister Matia Kasaija, who is overseeing the project is quoted to have said that the government is interested in salvaging UTL because it is a major provider of telecom services to government, employs over 500 Ugandans, and pays billions in taxes.

Court battles

UTL is embroiled in a legal battle with the former workers of the defunct Uganda Posts and Telecommunications Corporation (UPTC) from which it was carved during privatisation in 1998.

The former workers claim UTL owes them Shs15 billion in retirement benefits.  Meanwhile, UTL argues that that the retirement benefits of 1,986 former workers remitted to the National Social Security Fund was erroneous as the workers were already entitled to the Communications Employees Contributory Pension Scheme (UCEPS) and that a person is not entitled to retirement benefits from more than one mandatory retirement benefits scheme.

Kaboyo confirmed to The Independent that the issues surrounding the former workers pension and government debts owed to UTL remained a stumbling block in the course of discussions involving injecting capital into the country’s telecom firm.

“It is true there were disagreements over these issues but the government was willing to settle them,” he said.

Kaboyo says UTL as a business has made a great head way and improved its business performance by 53%, the best position the company has ever enjoyed over the years.

“At the moment, we plan to meet the companies that we owe money as we also struggle to ensure that those who owe UTL also pays to ensure that there’s continuity in the operation of the company,” he said.

He added that the company is looking at various financing options including selling its 480 telecom towers and bringing on board new investors.

Going Forward, Jim Mugunga, the spokesperson in the Ministry of Finance, Planning and Economic Development told The Independent in an interview that the government is now looking at ensuring that the UTL board is fully constituted and that the company remains operational.

“The government is also looking at engaging with the majority shareholder to ensure an orderly transition, with a possibility of inviting a new investor,” he said.

However, he could not state on how the government plan to ensure smooth operation of the cash trapped company in the short term.