Back to the drawing board: UTL’s prospective investor fails to raise capital, but the good news is that the company is yet to accrue new debts
Kampala, Uganda | JULIUS BUSINGE | Ugandan government is back to the drawing board to identify a new prospective investor to take over 69% shares in Uganda telecom that were formally owned by the Libyan authorities.
The Libyan authorities through the investment firm, Libyan Post, Telecommunications & IT Holding Company (LIPTIC), withdrew funding to the company in 2017 citing government’s failure to honour its financing obligations, a decision that triggered the Ugandan government to take full control of its operations as it seeks for a new investor.
Though the government had identified a Nigerian-based firm, Taleology Holdings GIB Ltd – out of the six firms that had submitted bids to takeover UTL – the latest information reveals that the company has failed to raise the required capital.
Taleology had been given up to January 26, 2019 to have raised 10% of the US$70million (Shs255bn) to enable it takeover operations of UTL as a majority shareholder, according to officials familiar with the matter, but failed to raise the money.
UTL needs around Shs255bn to clear some of the Shs536bn debt as well as help it upgrade its network to 4G especially in major towns of Kampala, Entebbe, Gulu, Mbarara, Mbale, Tororo, Busia and Fort Portal to guarantee fast internet speed to its customers.
The new investment is expected to stir competition in the telecom industry that is dominated by three multinationals firms – MTN, Airtel and Africell.
Evelyn Anite, the finance minister in charge of investment and privatization told The Independent on Feb.05 that they are taking the matter back to Cabinet for approval to seek for a new investor.
“It was wrong to choose this company…it was a waste of time; but it is good to learn a lesson,” she said.
She said the Financial Intelligence Authority (FIA) report had earlier identified gaps in the Taleology’s financial and telecommunication capability that made it unfit for the task but a section of government technocrats approved the deal.
A leaked FIA report to the media last year showed that Mauritius Telecom was the preferred company to buy a majority stake in the troubled UTL.
Asked on whether the company would lose business to its rival industry leaders – MTN and Airtel – because of the continued confusion, Anite said for as long as she is still serving as minister and Yoweri Museveni serving as President, all possible options will be explored to ensure that the company keeps running until a competent investor is identified to run the business.
“With all the incentives and the support given to it, UTL is still a very strong company,” Anite said.
Part of the Shs255bn is supposed to help settle the outstanding company debt amounting to Shs536bn.
The good news according to Anite is that ‘no new debt’ has accrued since the company was handed over to the provisional administrator.
Some analysts, however, had hinted on the possibility of liquidating the company as an option of dealing away with what they described UTL as ‘a white elephant’ that is highly indebted with old infrastructure.
However, the government has ruled out that plan.
“UTL is an important asset to government; we can’t just play with it,” Anite said. “This time we are going to be more serious with the search for the new investor.”
Anite’s view is supported by Kabiito Karamagi, the mananging partner at Ligomarc, a top commercial and corporate law firm in Kampala that has handled transactions of similar nature.