The Uganda Communications Commission [UCC] has threatened to close down the country’s oldest telecommunications company UTL!
This is contained in a leaked parliamentary report penned by the parliament committee on ICT chaired by Bunya west MP Vincent Bagiire.
The report is due for tabling before parliament.
According to the report accessed by Red Pepper, UTL is specializing in making losses and needs major financial bail out by government.
To make matters worse, UTL is not an agency under consideration in terms of budget by government because government is simply a minority shareholder in it and yet the majority shareholder-Libya is also in tatters.
According to the report, UCC [regulator] during a meeting with the committee alluded to the possibility of revoking the Uganda Telecom license.
“The main reason for the proposed cancellation of license is related to liquidity and failure to meet license obligations. This therefore undermines regulations,” the report states in part.
According to the report, when the committee got this information, it summoned the board of Uganda Telecom based on the fact that government has 31% shares in that struggling company.
The purpose of this interaction was to enable the committee understand the scope of challenges the company faces.
WHY UTL IS DYING
The committee established that UTL was last partially capitalized in 2012 and 2013. This inadequate investment in it has allegedly grossly compromised its profitability.
In fact, it was discovered that while other companies are operating on a 4G network and some will soon go to 5G network, for Uganda Telecom, this is still a dream.
The company merely operates at a 2G network far below! As such, the committee notes that this clearly points to how ailing this company is; the reason why its income has declined and reveals its fate!
Secondly, UTL’s ailment is worsened by the fact that its majority shareholders [LAP Green], a Libyan company are unable to access funding to recapitalize it.
This is as a result of the Arab Spring that saw disintegration of the Libyan economy and the freezing of funds by international community that were owned by among others; LAP Green.
“Government as a minority shareholder has also not invested financially in the company. The decline in revenues of Uganda Telecom has persisted since 2008 and something should have been done by now,” the report states.
According to the report, in countries like Rwanda and Zambia where LAP had stake in telecom companies, the government repossessed the companies when Libya was under UN sanctions.
Unfortunately though, for government of Uganda to repossess UTL, it requires amendment of the PERT Act.
The committee also proposes that UTL should consider getting married to another telecom company if it is to survive its current state of affairs.
“The committee recommends that government should expeditiously explore means of keeping the company afloat as its demise will have an adverse effect on telecom sector and the economy,” it states.