5 October 2017

Uganda: Telcos Protest Uganda Telecoms Taking Over Business

Telcos in Uganda have protested a government directive that all its business will be handled by Uganda Telecoms Ltd (UTL), in which the government has a minority stake.

On September 14, the government directed that public offices should buy their Internet, mobile and fixed telephone services from UTL.

Since 2013, government ministries, departments and agencies have been required to buy Internet backbone services from NBI, a public infrastructure company managed by Telmec.

Telcos, led by MTN Uganda, say the decision goes against free market principles. They are calling on the sector regulator, Uganda Communications Commission (UCC), to call for negotiations, failing which they will seek legal redress.

"The directive undermines the operational regime of a fully liberalised sector, and promotes anti-competitive behaviour by ring-fencing a major sector of the economy for one operator to the prejudice of other licensed operators," MTN's CEO, Wim Vanhelleputte, said in a letter to UCC.

The government says the move is meant to help UTL write off massive debts that led to it being placed under administration. However, UTL operates a 2G network while competitors are on 4G.

The telecoms sector was liberalised in 1998 allowing the entry of MTN, Airtel and other players. The Ugandan government does not have its own data providing services. Eighty per cent of companies are foreign owned.

Private operators say the government's action is in breach of the UCC Act, 2013, and the Public Procurement and Disposal of Assets Act, 2003.

"The commission shall in the performance of its functions under this act promote , develop and enforce fair competition and equality of treatment among all operators in any business or service relating to the communication," reads the UCC Act.

On September 22, UTL administrator Bemanya Twebaze briefed accounting officers on how they would implement the decision.

"UTL has now embarked on a strategy to enhance affordability and availability of Internet in Uganda to make our country competitive in the region," Mr Twebaze said.

UTL was placed under an administrator in April 2017 after a fall-out with majority shareholders in Libya. Libya owned 69 per cent while Uganda owned 31 per cent. In February, Libya recalled its directors, leaving Uganda with the burden of keeping the company afloat.


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