FinanceMore Africa NewsUganda: Govt Offers to Pay Shs 500 Billion UTL Liabilities

April 23, 2019by myles

Government has offered to waive all the liabilities held by Uganda Telecom Limited (UTL), as one of the attempts to attract a buyer for the company. This is according to two people, who are familiar with the search.

This means that the government will be responsible for up to Shs 500 billion of liabilities that UTL had at the time it sunk into administration two years ago. The new investor will only have to invest to overhaul the network because it is obsolete.

The government handed UTL to a Nigerian firm, Teleology Holdings GIB Ltd last October, after six months of scrutinizing several bidders. The investor, who had offered to pay $60 million (about Shs 225 billion), jumped out of the deal just after two months.

This week on Wednesday, state minister for investment Evelyn Anite said they realized that the deal was given to fraudsters and the search for genuine investors was on.

“What happens with UTL? Like you know Kisanja Hakuna Mchezo (term for serious business), and you know Anite, she don’t mince her words. I told them these a quack investors and it has come to see the day light that they are quack investors. We’re back on the drawing board to get a proper investor. One thing I can promise you and promise my president is that; we shall not betray our country to get quack investors or surrender our resources to fake people. That we’ll not do.” said Anite.

Now people involved in the search say that the government has a packaged the UTL deal in such way that it attracts serious bidders. “UTL is quite strategic. It appeals to any investor who is really serious. Someone will pick it up,” said our source.

The source added that the government had created incentives to make the company more attractive. They include managing the backbone, wiping all the liabilities off the balance sheet, and that the government would take responsibility for the pension liability of more than Shs 30 billion to former UTL employees. Other liabilities that the government would take care of include the regulator’s fees and taxes.

“All these wipe off the balance sheet and handed it [UTL] to you, clearly you can start from a clean slate.” the source said.

Another attractive offer is that UTL will continue running government business, providing communication services including mobile network and internet to several agencies. Our source said the investor will need to immediately upgrade the network from partly 2G and partly 3G to 4G. The investor will also have to address the issue of dropped calls and the network not going so far.

UTL was formerly under Libyan government ownership through UCOM Ltd who owned 69 per cent stake. They pulled out of the troubled telecom saying the Uganda government did not make concrete steps, including injection of new capital.

To prevent its liquidation, the government scrambled and placed the telecom under the administration of registrar general Bemanya Twebaze and the search for an investor to buy has been on since 2017.

Read the original article on Observer.

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