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MTN licence expires, rivals fight renewal

Revellers at an MTN Uganda outlet

MTN licence expires: Dirty details of Uganda telecom sector exposed

Kampala, Uganda | HAGGAI MATSIKO | Uganda’s largest telecom company, MTN Uganda is caught up in a fight to secure the renewal of its licence which expires this year, The Independent can reveal.

With 55 percent of telecom market share or about 11.2 million subscribers accumulated over 20 years of operation, stakes are high.

The fight intensified in December after sector regulator—Uganda Communications Commission (UCC)—announced that the telecom had applied to extend its licence for more ten years starting October this year.

As part of the announcement, UCC called on those with objections to come forward with them as it puts together its evaluation report of the company to be unveiled on Feb. 13 ahead of a public hearing on the same matter on Feb.26.

Leading the fight is a group of service providers, who have petitioned President Yoweri Museveni, parliament and the sector regulator asking that MTN is probed for several alleged violations before its licence is renewed.

The group, Wireless Applications and Service Providers Association of Uganda (WASPA-U), claims that it represents over 60 ICT companies all together.

“WASPA-U also used to employ in excess of 400 youths, mostly young IT graduates and software engineers,” the group writes in a Dec.27 letter to President Museveni, “However, MTN’s impunity and not being committed to compliance, disregarding rules and regulations of Uganda, brought this to almost zero as they grabbed resources of the local companies, and illegally withholding share revenues to them.”

Aware that the Ugandan managers would easily ignore these concerns and lobby those with powers to overrule these matters, some of the WASPA-U members reached out to key shareholders in South Africa who have already picked interest and are mounting pressure on the Ugandan bosses to deal with these tensions before they spread. One of the WASPA-U members told The Independent that MTN Uganda chairman, Charles Mbiire had met them and pledged to help after they contacted some top officials in South Africa. President Museveni has been sucked in to pile more pressure.

Attached to the letter addressed to President Museveni, is a petition in which they raise several charges against MTN ranging from under declaring of revenues, to unethical business practices, anti-competition behavior, illegal takeover of their businesses, violation of laws, and withholding of payments to local companies.

Of these, the charge that is most likely to attract the attention of the president, the country’s taxman and parliament is under declaring of revenues and causing loss of tax revenue, insiders say.

MTN has in the past faced charges of unfair competition practices, under declaration and non-compliance with the law, including in other markets where it operates. In Uganda, the company is in court over allegations by other companies and the tax authority of unfair competition and under declaration.

In 2016 non-compliance caused the Nigerian Communications Commission (NCC) to slap the telecom company with a $5.2bn (approx.. Shs19 trillion) fine for not meeting the deadline for disconnecting the SIM cards with improper registration.

This time, if the evidence being tabled by some of the WASPA-U members sticks, MTN could be facing serious charges of under declaring.

One of the members of WASPA-U, a company called SMS Empire, has been in court with MTN since 2014.

Court documents seen by The Independent show that SMS Empire took MTN to court for breach of contract. The Independent has also seen settlement deeds in which MTN settled disputes with companies like Grafitti Mobile, which had similar grievances. Other disputes with other companies have been before the regulator’s disputes tribunal.

MTN officials had not responded to questions from The Independent by press time. The questions that MTN needed to answer included what their response to WASPA-U allegations is.  Does MTN use databases of competing businesses it expires?

Despite MTN’s remaining tight-lipped, details indicate that a battle between MTN and SMS Empire is raging in court.

Godfrey Mutabazi, the Executive Director, UCC told The Independent that the concerns by the petitioners require investigation and declined to comment on issues before court.

The Independent can, therefore,  only describe how it stems from a contract MTN allegedly entered with SMS Empire to provide content to MTN subscribers at a fee, which would then be shared between the two companies.

SMS Empire officials say 2012, SMS Empire earned Shs. 1.4 billion, the following year Shs. 2.27 billion and in 2014, 3.3 billion.

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