City Firms Fight For UTL Deals

Those reconsidering gov’t telecom include UMEME, Total Uganda & UETCL

By John V Sserwaniko

Only a few months ago, everyone shunned UTL like it was a leper. Service providers didn’t want anything to do with UTL, which now is a 100% government-owned telecom company.

There was so much mismanagement, service providers went unpaid for years. This didn’t
spare URA whose tax obligations went uncomplied with for years. Some shunned UTL simply to protest its failure to heed the most basic of corporate governance values such as paying staff salaries.

The situation had become so hopeless that the company’s liabilities had grown to Shs700bn against an asset base of Shs100bn! The Parliamentary report of March 2017, resulting from MP Nandala’s whistle blowing, revealed that to revive UTL, government needed a minimum of Shs1.2trn.

This is how it: besides the Shs700bn in liabilities, you needed another Shs500bn to revive the company bringing the total to Shs1.2trn. This is the situation the statutory administrator Twebaze Bemanya inherited in April when he took charge of the situation.

His immediate task ideally was to oversee the dissolution of the company which everybody believed was a gone case. However, along the way President Museveni and supervisors at the finance ministry realized something could be done and UTL would be revived to profitability.

Stakeholder meetings were called, effective May, to enable Bemanya verify the
authenticity of the claimants on the creditors’ list. The professional audit firm, PWC, was contracted to verify the claims against UTL and many of those fronting fraudulent claims fled in thin air having
failed to justify their claims as required by PWC.

To completely burry off UTL and permanently deny it chance to ever “resurrect” again, some of the powerful people privy to the previous Libyan-supervised management tried to hide some information from Bemanya in order to “eat in chaos [okulira mu kavuyo]” as they say.

For instance information regarding GoU’s 9% shareholding (totaling to over $20m) in WIOCC (which controls data services at the cost) was withheld for some time and the idea was to fraudulently pass on GoU’s shareholding to the Libyans in which case the GoU/UTL would totally lose out.

The new leadership at UTL protested this as it would constrain GoU’s future efforts to force down internet costs. Ability to participate in control and ownership of data (through the WIOCC shareholding) has currently enabled UTL to profitably offer internet services to MDAs like IGG, Parliament, UIA and others at a mere $100/MBPS against the more than $190/MBPS charged by other IPSs operating in the same market.

A lot has since changed and Museveni government’s determination now is to fully revamp UTL with GoU owning it 100%. UTL, which used to default of tax obligations these days writes weekly cheques to URA which had taken years without recovering any taxes from UTL. The other telecom operators (MTN, Airtel etc) which were on the verge of terminating interconnection calls with UTL now pleasantly
recover their interconnection fees weekly from UTL.

“UTL always had potential and the biggest problem was mismanagement which the administrator has ably fixed and within three years, UTL will be the market leader and the situation will then resemble Ethiopia and other countries where the leading IPS is government-owned,” remarked a very
impressed Ministry of Finance top technocrat.

“The President indeed saw far because all of us had voted for dissolution but with his foresight, he said let’s give it a chance under the Administration period.”

RUSH FOR BIZ: This story of a rapidly revamping UTL has inspired many companies that had turned their back on UTL to reconsider it once gain for big business prospects. One of the companies which had blacklisted UTL for not being good to do business with (just like URA and UCC had done) was Total Uganda whose fuel the old UTL management had consumed (mostly to keep the over 400 masts-based generators running) without paying for years.

We have reliably learnt from the Total sales and marketing team that today UTL is considered among the best clients for Total Uganda. This is so because in the pre-administration days, UTL had accumulated so much debt that the Total Uganda management had given up on recovery and was considering legal action.

“The new guys have done so well that we are now developing a comprehensive proposal
to reserve fuel for the UTL for a whole year. This shows serious turnaround of the company’s situation because as of April, we could only give them fuel if they paid in advance. If they wanted fuel at mid-day they had to pay at 10am before they could have it but this has changed.

We now have confidence in UTL and its one client we can’t afford to lose to any of our competitors,” said a source in Total Uganda top executive quoting contents of a recent sales team report
profiling different clients.  This largely happened because the new management under the Administrator put in place checks that eliminated wasteful expenditures on fuel expenses many of which were based on fictitious requisitions.

Having confirmed many of the generators for which fuel expenses were being incurred were actually not working having dysfunctioned years earlier, the administrator rationalized expenditure on fuel and within weeks reduced the bill by hundreds of millions.

Yet it isn’t only Total Uganda. UMEME is another entity that had written off UTL and their board chairman Bitature had even informed the President UMEME was going to terminate power supply to
UTL installations protesting non-payment.  Museveni, who proudly uses a UTL landline to make phone calls from State House, couldn’t stand this embarrassment.

He rang the Finance Ministry bosses urging them to negotiate with UMEME to work out a schedule for UTL to pay since the new management had in place a well-illustrated recovery plan. UMEME
has since become so happy and can’t turn its back on UTL whose management these days makes weekly payments for electricity used manning hundreds of it’s installations across Uganda.  We can reliably
reveal that Uganda Electricity Transmission Company Ltd (UETCL) is another powerful entity/company seeking to do business with the rapidly revamping UTL.

The UETCL sales teams have already reached out proposing to consolidate their partnership with UTL which initially will have to rely on its (UETCL’s) aerial fiber network to be able to execute the new assignment of delivering high quality reliable internet to all government MDAs as directed by PSST Keith Muhakanizi.

Energy Ministry sources say UETCL has capacity worth over 100Gs yet UTL will require not more than 20Gs to satisfy the service needs of all the MDAs that have been handed to them by Muhakanizi. UETCL is ready to offer UTL fiber services to be able to reach areas that they may not be able to immediately reach in the short run.

Excited by Muhakanizi’s directive, Muni University is ready to terminate RENO/its current ISP and join Makerere and Mubs in migrating to UTL services. Amelia Kyambadde’s Trade Ministry too looks forward to UTL (implementing the Muhakanizi directive) to demonstrate the wonders embedded in BuBu policy which they have been promoting in government agencies urging them to consume Ugandan products and services to rebuild the economy.

The Uganda Police Force has finalized plans to take up more UTL lines for its officers over and above the 5,000 UTL lines they already have. The IGG’s office is also hopeful a revamped UTL will provide affordable internet and telecom services to increase electronic/online interface between the headquarters in Kampala and branches upcountry.

Uganda Development Bank is equally opportunistic to enjoy the revamped UTL services subject to approvals and guidance from regulator BoU. UPDF and the security ministry hope with a revamped UTL it will be easier to preserve the integrity of Uganda’s sensitive data to ensure it’s not manipulated by hostile elements operating with the EAC region and beyond.

In fact following the Muhakanizi directive, that must be implemented in three weeks, the
Administrator has set up a task force at UTL to interface with the MDAs to work out the modalities to expeditiously implement the directive.

This task force will have to organize a meeting for the UTL top management team to hear views from the MDAs regarding areas that must be improved and how to implement the Muhakanizi directive without disrupting service delivery by the MDAs.