Museveni’s money fights with MTN

Apart from this MTN insiders note that already, they pay about $11 million to government in spectrum and other fees per year. In ten years, that comes $110 million. As a result, they said that they should only give government $8 million more to make the $ 118 million. But that was a figure proposed by the Finance Ministry.

As already noted, UCC had asked for US$100 million. When MTN protested again, UCC in a November 16, 2018 letter indicated that the figure had been cut to US$58 million.

The UCC Executive Director, Godfrey Mutabazi wrote to MTN informing them that that was the conclusion of negotiations over the terms for renewal of the licence.

Mutabazi communicated the same position to then-CEO Wim the following day, November 17.

Two days later, Wim wrote saying MTN was encouraged by the outcome of the meeting but appeared to through a spanner into the deal.

“As discussed and agreed in that meeting, in order to conclude the ongoing (Second National Operator) SNO-licence renewal discussions, MTN will pay a SNO-licence renewal fee of USD 20,000,000 upon the granting of the renewal of our current SNO-licence, as is, for 10 years, including the continuous right of use of the currently used spectrum,” Wim’s letter reads in part.

Wim noted that MTN was planning to make further investments into the network to meet the objectives of the new broadband policy and deliver in the longterm the required 4Mbps internet speed countrywide. He noted that they estimated to spend some USD200,000,000 in the next few years to achieve this.

Mutabazi was not happy. Six days later he replied MTN saying UCC was astonished that MTN was still raising issues that were already formally answered in the earlier letter.

Regarding the licence renewal fee to be paid, Mutabazi wrote, the Commission reiterated its position that was communicated in the letter of November 16, 2018, that after reviewing the key parameters, the Commission had agreed to revise the renewal fee from the initial USD 100 million to USD 58 million.

“The revised figure was communicated as the final amount that MTN was expected to pay as licence renewal fee, unless otherwise modified by the ongoing consultative process within government,” Mutabazi noted.

He added that the position presented by MTN in its letter of November 19, 2018 is not a true reflection of what parties had agreed upon; especially in so far as MTN claimed that the Commission had agreed to MTN’s proposal to pay USD 20,000,000 and obtain an extension of the 1998 SNO licence.

“We wish to emphasise that the renewal period shall be covered by the new terms and conditions,” Mutabazi’s letter reads, “which the commission has duly shared with MTN.”

Mutabazi also noted that the renewal process had been halted until the terms and conditions for the renewal have been harmonised with other government authorities.

Museveni intervenes

The Independent has learnt that Mutabazi’s decision to halt the negotiations with MTN appears to have been influenced by intervention in the matter by Museveni.

Museveni argues that the US$58 that UCC has asked MTN to pay is too little.

“You ought to be aware that over the 20 years span during which MTN has been operating in Uganda, it has reaped vast profits most of which have obviously been repatriated. This is common knowledge derived from the company’s own declarations and from our own sources,” President Museveni wrote to UCC and ministry of ICT on October 28, 2018.

“Accordingly, the company’s obligation to sow where it intends to reap for the next 10 years; as well as its ability to do so, is and cannot be in doubt.

“I am, therefore, astonished by UCC’s proposal of a renewal fee of $58m, far less than the $100m it has originally set. I am even more intrigued by UCC’s decision to abandon original market expansion multiplier formula of 2.64 for 1.69, which obviously leads to a different result. What is the reason for this change of heart?” I am hereby directing both of you to protect the interest of both the country and investor by ensuring that you scrutinise the process and involve Finance and the tax matters. I expect a quick resolution and an update in 14 days.”

Apart from the licence fees, The Independent understands that authorities are also keen to get MTN to list on the local stock exchange in order for locals to own a part of the company.

The National Broadband Policy 2018, which guides development of the sector, notes that listing of all telecom operators, on the local stock market, as a licencing condition will help on mitigation of capital flight among other benefits of local content development opportunities that come along.

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