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MTN’s licence fees could go up

Airtel, Africell likely to face similar fate as government seek more revenue

Kampala, Uganda | ISAAC KHISA | MTN Uganda might pay higher licence fees than had earlier anticipated following the regulator’s decision to introduce a new licensing regime.

The Uganda Communication Commission, in its latest licensing framework, states that the telecom firm’s operating licence will now be extended from 15 to 20 years.

In addition, the telecom firm will also have to apply for only one operating licence either as   a National Telecom Operator (NTO), National Public Service Provider (NPSP), Regional Public Service Provider (RPSP), and National Public Infrastructure Provider (NPIP) License or as Regional Public Infrastructure Provider (RPIP) License.

A NTO will, at minimum, cover 95% of the country’s geographical area, eligible for national spectrum allocation based on expansion plans, legal and regulatory framework, public interest and availability of respective resources.

The NTO will also have an obligatory role to host infrastructure services to regional public service providers for regional and national rollout within their licenced zones.

MTN, which operates as a National Telecom Operator, was previously required to pay US$118million for a 15-year licence.

However, the changes in the licensing framework implies that MTN Uganda could pay higher fees for the operating licence so as to comply with the new licensing regime.

However, UCC Spokesperson, Ibrahim Bbosa, said the company is still in negotiations with the government to agree on the exact figure to pay for the license renewal.

“MTN has been having a national telecommunication operating licence and nothing has changed…the stage at which we are now on with regard to renewal of its licence is the determination of how much it is going to cost,” he told The Independent in interview.

“That is something being handled at the government level… UCC, finance ministry, ICT Ministry, Attorney General, and the cabinet.”

Sources told The Independent that MTN team had requested for clarification from government on methodology that the team at the Finance Ministry will use to come up with the figure.

The figure that will be reached at with MTN is also expected to be used for other telecoms at the time of their licence renewal based on the category and type of their licence.

MTN’s licence expired in October 2018 and is currently operating on temporary licences till the end of this year. However, UCC has also given telecom firms 60 days to re-apply for licences which they wish to be granted.

An operator whose coverage is over 65% of the geographical boundary of Uganda, or operating in three regions, UCC says, they shall be legible for a national license in the NTO or National PIP or PSP category.

This can apply to MTN, Airtel, UTL and Africell. Operators currently covering less than 65% or operating in less than three regions, will be eligible for a regional license.

On the other hand, any operator who currently only holds NTO licenses such as MTN will continue operating as such in the new licensing framework.

The telecom firms will also be required to list at least 20% of the shares on the stock market within two years of operations. However, this will be subjected to the firm’s profitability and ability to meet the Capital Market Authority requirements.

30% revenue growth

MTN Uganda recorded a 30.5% growth in revenue to Shs765.32bn for the first six months ending June.30 owed to the increase in demand for data and fin-tech services.

The firm’s data earnings nearly doubled from Shs61.6bn to Shs117.8bn whereas fin-tech services revenue grew 17% to Shs183.8bn during the same period under review.

However, digital services revenue declined by about 54% to Shs2.6bn. Its capital investment nearly doubled [from Shs94bn] to Shs162.9bn.

Currently, MTN Uganda holds about 54% market share in a market of eight telecom firms. It has approximately 11.3million customers.

Last year, it recorded 4.4% rise in revenue to Shs1.38 trillion citing increase in customer numbers, data and fintech services.

Industry reactions

Some industry experts say the new licensing framework could disrupt the sector and result into over regulation.

Most operators were opposed to the fee increment since they are already paying many other taxes and the fear that changing licenses might adversely affect the rights of existing operator’s licenses.

Most operators also warned UCC against implementing ‘Number Portability’ as it has failed in many other African countries like Nigeria.

They however welcomed the proposal of infrastructure sharing and the idea that UCC should crackdown on spectrum hoarding and speculative investors.

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