9 February 2018

Uganda: Museveni Enters UTL, Nita Battle

A presidential directive issued last month for government agencies to buy internet bandwidth from Uganda Telecom Limited (UTL) may not only rescue the troubled state parastatal, but potentially be a grim forewarning of bad times ahead for the National Information Technology Authority-Uganda (NITA-U).

President Museveni issued the directive at the urging of state minister for Investment and Privatisation, Evelyn Anite.

The minister reportedly told the president that the viable option for government was to offer the struggling telecom business opportunities which could, in one stroke, also save the government billions of shillings.

Anite has been embroiled in boardroom fights with NITA-U over charges for internet data levied on government ministries, departments and agencies (MDAs).

"We had asked them [NITA-U] to give us business and they refused, they opted to do business with Soliton Telmec, a foreign company, and ended up selling internet expensively to the MDAs," Anite told The Observer on February 3.

Anite said NITA-U charged the MDAs $344 (Shs 1.2m) per Mbps per month (megabits per second - data transfer speed) which she says is the highest price in Africa.

Her claims are backed by a report of an undercover Internal Security Organisation (ISO) agent deployed inside NITA-U.

The agent's report said NITA-U bosses are causing government a monthly loss of more than Shs 30 billion paid to Kenyan IT giants to offer internet services to the MDAs through the national backbone infrastructure.

"I called them [NITA-U] to a meeting with my technical people from UTL who offered to sell them the internet at $90 [Shs 324,000] so that they can sell it to MDAs at $100 [Shs 360,000], they bargained and UTL agreed to sell at $50 [Shs 180,000] but again, they turned around and said they can't buy from us," Anite said.

This followed an earlier meeting Anite convened with representation from the various MDAs, including NITA-U, to discuss the possibility of doing business with UTL.

"I was acting on a directive from the president that UTL should not be liquidated. That is why I had to hire private lawyers to challenge a creditor who had filed a suit in court for the liquidation of the company. Matters were saved when the lawyers invoked a law that had never been applied, and put the company and all its creditors under administrative insolvency," the youthful minister said.

UTL's liabilities at the time stood at over Shs 698.1 billion, which accrued from accumulated loans, court costs, interconnection and statutory fees, among others.

The permanent secretary, ministry of Finance, Keith Muhakanizi, last October unsuccessfully directed all MDAs to buy internet data from UTL. His counterpart at the ministry of ICT and National Guidance, Vincent Bagiire, reversed the instruction.

Informed sources say that as the fight between UTL and NITA-U raged, Anite petitioned Museveni.

"When the fights ensued, UTL took a decision that we shouldn't fight with NITA-U; we went to the president... ," Anite said.

In 2013, the auditor general found that implementation of the first two phases of the National Backbone Infrastructure (NBI) and e-government services projects were causing loss of money that could have been saved, amounting to $41.9 million (Shs 152 billion).

"We note that the cost of fibre per kilometre was significantly higher than that for many local operators in Uganda based on the review of bills and quantities... ," the audit observed.

Now, a knowledgeable person fears that NITA-U could lose the NBI project to Uganda Communications Commission.


In the January 9 directive, Museveni said: "I have been informed that there had been a scheme to devalue the assets of UTL by corrupt officials that had been sucking that company and paying themselves huge salaries."

"The company has a lot of assets including a shareholding of 9.13 per cent in the West Indian Ocean Sub-marine cable. They also have infrastructure to transmit and store electronic data. Therefore, I direct that there should be no more sales of the assets of the company. Instead, I fully accept Hon Anite's proposal."

He directed that all UTL debt owed to government be converted into equity to be held by Uganda Development Corporation on behalf of government. NITA-U, however, has since questioned UTL's capacity.

"UTL does not have the capacity to deliver this service to MDAs across the country. Today UTL does not even offer internet bandwidth at $100 to the citizens on the market, yet it is a private company that should be able to do so. UTL is where it is because it lacks the capacity to deliver high-quality services with the lowest prices across the country," a source at NITA-U said.

Additionally, NITA-U claims that all UTL's core equipment has reached end of life.

"How secure is the obsolete infrastructure that UTL currently uses to deliver services? Because UTL has obsolete equipment, UTL cannot update the software of their equipment, therefore leaving vulnerabilities in the network...," a NITA-U official argued.

NITA-U claims UTL has to invest over $100m to upgrade from its current 2G network to the 3G/4G, an idea that Anite partly agrees with.

"If you are talking about mobile data, yes, we haven't upgraded but it is not what we are selling to the MDAs; they are getting internet through the cable to the computer. There are also plans to upgrade the mobile network and that can only be achieved when the company is supported," Anite said.

UTL administrator Bemanya Twebaze said UTL's network availability has improved from 75 percent over a period of eight months to the current 93 percent.

Another claim by a highly placed NITA-U source that UTL's ownership of the 9.13 shares in the West Indian Ocean Cable Company (WIOCC) is in doubt was also denied. According to the source, UTL never paid for shares 'recovered' from LAP Green, the Libyan company which once held majority shares in UTL but pulled out.

Anite insists that UTL's stake in WIOCC is secure. In a turn-around, this Monday, February 5, NITA-U leaders told The Observer they were ready to work with UTL.

"NITA-U has no qualms working with UTL," said Steven Kirega, the authority's marketing and communications officer.

"As per the presidential directive, we are working with, under the guidance of the prime minister, minister of ICT&NG and permanent secretary to agree on the modalities of procuring internet bandwidth from Uganda Telecom (UTL) /West Indian Ocean Cable Company (WIOCC)."

"I believe it's a shared vision across the board that the cost of connectivity needs to reduce. We, therefore, welcome any initiatives that complement our already ongoing agenda... "

But Otaremwa Omutuhumurize, the UTL head of telephone, said Kirega was telling blatant lies since there are no ongoing talks with NITA-U.




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