Uganda: MTN Licence - We Want a Win-Win, Says Government

(file photo).
28 January 2019

Government has said it is seeking a win-win before it can fully renew MTN's licence.

Responding to Daily Monitor's inquiries on why government continues to partially renew the telecom's licence, Mr Frank Tumwebaze, the ICT minister, said they were focusing on achieving a win-win for both MTN and government.

The negotiations for the renewal have been ongoing since August last year when MTN reapplied to renew its 20-year licence, which expired in October.

"When MTN first got its licence 20 years ago, the market was small and tradable communication products were limited. So not much in terms of fees was charged. The market is now much bigger. So it's fair that government gets a reasonable share from the licence fees to build the economy," Mr Tumwebaze said.

The negotiations, he said, are being conducted in consultation with other stakeholders including Ministry of Finance and Uganda Revenue Authority, which are advising Uganda Communications Commission on the way forward.

"Currently UCC has been guided to give MTN a provisional licence to avoid a regulatory vacuum pending conclusion of these negotiations," Mr Tumwebaze said.

Last week, government said it had renewed MTN's licence by another three months after the expiry of the provisional 60-day licence that had been given to the telecom in October last year.

The provisional licence came on the back of reports that the President had questioned how UCC and the ICT Ministry had revised the licence fees from $100m, which had been agreed on by Cabinet, down to $58m.

The President also wondered why UCC had not involved key stakeholders such as Ministry of Finance and URA in the negotiations.

Sources close to the negotiation, who asked not to be named to speak freely, told Daily Monitor the figure had been revised after MTN pointed to new investment requirements outlined under the National Broadband Policy.

The new requirements, sources said, will require telecoms to invest more than $200m to extend netweork coverage to every part of the country as well as extending 3G access to all sub-counties.

Mr Godfrey Mutabazi, the UCC executive director, last week told Daily Monitor the licence negotiations were just a small component of the discussions that are currently focused on how best to implement the National Broadband Policy.

"There is no issue about the MTN licence. I think we should not look at the licence alone. We should look at the more than $1b MTN has invested in the economy and how much they are going to invest," he said, noting that the negotiations are more focused on the National Broadband Policy.

Cabinet in September endorsed the National Broadband Policy which, among others, seeks to support and scale up ICT services from both the demand and supply side.

This, according to the policy, will be achieved through collaboration between government and private operators, especially in the area of deploying broadband infrastructures to achieve connectivity for all, digital inclusion and affordability.

Mr Charles Mbire, the MTN Uganda chairman, last week told Daily Monitor they were still discussing with government but had been offered a three-month provisional renewal.

"We are still in negotiations. I think they [govt] are waiting for the law [National Broadband Policy] to be put in place and also negotiate with all other operators because we are all supposed to pay the same amount," he said.

However, he noted, the new policy will come with certain conditions, among them, requiring telecoms to invest in the region of $200m in broadband infrastructure.

National broadband Policy

The National Broadband Policy will also make it mandatory for all telecoms to open up to local ownership through either private placement, public offering or listing by introduction.

This, according to government, will among others, increase tax collection due to improved transparency in public financial reporting standards, reduce pressure on the shilling against the dollar, as well as help the growth trajectory of the Uganda stock markets.

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