More trouble at embattled UTL

The government of Uganda invested massively in the telecom company and stands to lose billions of shillings if the situation is not rectified.

The mess surrounding Uganda Telecom Limited (utl) does not seem to be improving, as one scandal after another continue to rock the company. In the first such scandal, utl was making colossal losses, registering a loss of 16 and 11 billion shillings in 2008 and 2009 respectively. While these losses were being made, the company was painting a picture of itself showing all was well.

Another fiasco involving utl is still being battled out in court whereby the company owes MTN re-connection fees worth over 20 billion shillings which accumulated over a three- year period. MTN is threatening to cut off its services to utl.

However, the most recent scandal from utl is one whereby the company has lost huge sums of money through bungled procurement deals with companies that belong to a one Habib Kagimu, a man who has strong ties to the Libyan companies that own a lion’s share of utl.

The Libyan African Portfolio (LAP) under the Green Network (GreenN) own 69 Percent of utl while 31 Percent is owned by the government of Uganda. However, the Ugandan government recently took over full management of the company in line with the United Nations’ decision to freeze all assets owned by Gaddafi. In this case, the Ugandan government is holding the 69 Percent owned by Libyans in trust until the matters in Libya are resolved.

United Telecom Limited and Tele-Choice Limited, companies that belong to city tycoon and friend to the embattled Libyan leader, Habib Kagimu under Habib Investments, are some of the service providers to utl that have been accused of giving the telecom company a raw deal.

Another company, Teltec Limited, which supplied cables to utl and has been alleged to belong to Kagimu as well was later discovered not to be part of Habib Investments. However, this company is accused of not having supplied the agreed amount of cables to utl which led to losses worth three billion shillings. Other cables worth 3.6 billion that had been supplied by the same firm were apparently stolen from the utl stores.

The new utl Managing Director Donald Nyakairu intimated to Kampala Dispatch that he is not happy with the way things have been running.

“We are not happy with the way United Telecom has been providing its services to us,” Nyakairu said in response to a question about the 50,000 liters of fuel that are suspected to have been swindled by United Telecom. This fuel was given to that firm to be supplied to the up-country stations which run on generators, but the firm alleged used up all the fuel in one week which led to the switching-off of utl generators and other network gadgets in the affected areas leading to losses.

“We are suspicious that the fuel never reached the sites, and when I came in here in April 2011, we instituted new measures of fuel delivery. We now have independent supervisors to witness the loading and off-loading of fuel in the different company premises,” Nyakairu asserted.

As to why he still maintains such a company as a service provider given its reputation, he says without further elaboration that “we shall maintain them but with more supervision and we are investigating what happened in May (when the fuel is suspected to have been stolen), we have also split up their contract, so we now have a second operator”.

Pressed further to comment on whether there is no conflict of interests in having Habib Investments companies as service providers for utl, Nyakairu said that “I do not know whether we have any agreement with Habib Investments on this.” Habib’s Tele-choice company is the biggest distributor of utl products and services.

When contacted, both Teltec and United Telecom did not want to divulge any information concerning the queries arguing that they could not speak to the media about their biggest client.

A Teletec Manager who identified himself as Joseph told Kampala Dispatch that his company will only respond if utl makes a formal complaint to them. “utl has got several challenges” is all he said.

Similarly, a one Maria of United Telecom turned down requests to give an explanation saying that she was not going to disclose any of her company’s dealings with utl because “those are our biggest clients.”

Adding insult to the injuries of utl, it has also emerged that MTN has for the second time this year sued utl for unpaid interconnection charges totaling 9.3 billion shillings. According to the MTN suit filed against utl on June 15, it is stated that this amount accrued from interconnection fees during the period between January and December 2010. Airtel also claims that utl owes them over eight billion shillings in unpaid interconnection fees and other similar charges.

The Uganda Communications Commission (UCC) which has been mediating between utl and MTN, said that there is a big problem at hand, and that they have had problems trying to convince utl to pay up.

“Government should be advised that we have a big problem, we have tried to convince utl to pay but they are still adamant,” UCC’s Director for Competition and corporate affairs David Ogong said.

To make utl’s financial matters even worse, UCC itself has also handed utl a bill of six billion in unpaid remittances to the rural communication development fund. This is a fund where all telecom companies are legally required to remit one percent of their gross revenue.

It has also emerged that the Uganda Media Owners’ Association (UMOA) have placed a ban on advertising utl because of unpaid fees in adverts amounting to over three billion shillings. UMOA comprises of media houses including TV stations, radio stations and newspapers.

With all those debts around its neck and the mismanagement coupled with grand corruption, the future of utl looks bleak. This is prompting some to speculate that the end of this telecom company is no longer a question of “if” but “when”, unless some special intervention is rolled out in time to save the situation.

By Edward Ronald Sekyewa