Top management at Uganda’s oldest telecom company UTL has been sacked to pave way for investigations into the company operations.
In an interview with The Independent, Evelyn Anite, the state minister of finance for investment and privatization confirmed Uganda Telecom Ltd (UTL) has been put under provisional administration for one month (from April 28) before government makes another decision.
The provisional administration is headed by Bemanya Twebaze, the executive director of another government agency – Uganda Registration Services Bureau (URSB). URSB gets its powers in this case from section 198 of the insolvency Act, 2011.
Anite said the old management led by UTL Board Chairman Stephen Kaboyo, David Nambale, the Company Secretary, Mark Shoebridge, the managing director and others would leave the affairs of the company to the provisional administrator.
This decision was taken basing on a report that indicated that the company’s assets are Shs 148 bn – almost five times less than liabilities – recorded at Shs 700 bn – which means the company is insolvent and illegally operating. It has to be shutdown to pave way for clearing of its creditors.
UTL assets are Shs 148 bn – almost five times less than liabilities – recorded at Shs 700 bn – which means the company is insolvent and illegally operating. It has to be shutdown to pave way for clearing of its creditors.
But Anite said under this provisional arrangement, government will not allow the company to close because it serves it with strategic communication services, employs 500 people and pays taxes among other benefits.
“We have already received people wanting to invest in the company,” she said, “We are doing what it takes to turnaround the company. Customers should not worry.”
Anite has been working with management on a turnaround strategy for the company since 2016 when its troubles exploded under its Libyan government owners. Until recently, the Libyan government through a private company called Ucom controlled management as the major shareholder with 69% shares. The government of Uganda owns 31% shares.
The government announced on March 01 that it was taking over Uganda Telecom Ltd (UTL) following failure by the Libyan majority shareholders, the Libyan Post, Telecommunications & IT Holding Company (LPTIC), to inject more money into the venture.
The government move came five days after LPTIC announced it was stopping further funding UTL on Feb.25.
Stephen Kaboyo, the UTL Board chairperson in an interview with The Independent described the departure of the Libyans who controlled 69% of the company as a “voluntary abandonment”.
Kaboyo explained: “The reason why I say voluntary abandonment is that they were not forced to leave UTL. They decided to exit on their own and are no longer interested in the affairs of UTL. This is exemplified by their decision to instruct their board members to resign.”
“These are people who invested a lot of money in the company and possibly have looked at the financial standing and realised that their return on investment is very low and/or the market dynamic cannot sustain UTL’s operation.”
Voluntary abandonment is a technical word meaning voluntary surrender of an asset by an entity to which the asset rightfully belongs without the entity indicating a successor to the right of ownership of the asset.
Under law, an abandoned asset is taken over by the state. However, there are procedures to be followed and it not clear if they were indeed followed.
Any omissions often pop up to frustrate business transactions in cases like this, experts say.