More Africa NewsHow UTCL ‘acquired’ Uganda Telecom for USD 81.3 million

November 3, 2022by myles0

After years characterized by poor cashflows, subpar governance, and an aged network due to low investment, Uganda Telecom (UTL), has been acquired by yet another government-owned entity called Uganda Telecommunications Corporation Limited (UTCL) at UGX 316 billion (USD 81.3 million).

Its a public secret that Uganda Telecom has been trying to stay afloat and had recently been put under receivership. This is a court-appointed tool that can assist creditors to recover funds in default and can help troubled companies avoid bankruptcy. Before entering into administration, UTL was 69% owned by Ucom, a Libyan government company, and 31% by the government of Uganda (GOU). The government had in the past tried and failed to sale Uganda Telecom to Teleology Holdings Ltd and Mauritius Telecom.

The revival of Ugandan owned telecommunication firm was no doubt something that was inevitable and the only way that it could be pull off was to form of a new entity from the ground up– and in October 2020 Uganda government opted to borrow from the Trade and Development Bank (TDB) over USD 650 million. They bank couldn’t fork out this money unless the government settled UTL’s outstanding loan with it and subsequently the government paid USD 15.6 million to TDB.

This gave birth to a new company Uganda Telecommunications Corporation Limited (UTCL) which was incorporated on 8th April 2021 to start preparing the process of buying Uganda Telecom. UTCL is 100% owned by the government of Uganda, with the Minister Of Finance holding 60% and the Minister of ICT & National Guidance, holding 40% UTCL gave an offer to the administrator.

This all meant that UTL had to be dissolved, and UTCL had to acquire several assets from the struggling telecom. On the 23rd February 2022, there was an asset sale and purchase agreement signed between the two parties. The new telecom paid UTL UGX 256.9 million over and above the USD 15.6 million it had already paid to TDB. The combination of the two expenditures brought the total value of the deal to about UGX 316 million (USD 81.3 million). The aqcuisition marks the end of the administration process and transition into the process of fully setting up UTCL.

It is still unclear which telecom services the new UTCL will offer, but in order to be competitive they should also acquire all UTL’s existing 2G, 3G and 4G frequency spectrum from the regulator UCC. They should also be competitive in the mobile financial sector in the long run. But all this would require good company governance, financial displine within the company and great technical expertise, else UTCL will ending up like another UTL in the long-run.

Source: Techjaja

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