Why Government is taking over UTL

By Najibu Mulema

Government has taken over the management and affairs of Uganda Telecom Limited (UTL) which has been for a while sailing on troubled waters due to an economic recession the telecommunication company had incurred.

Ucom has been responsible for management of the company. However, UTL’s performance since 2007 has been characterized by heavy indebtedness, decline in market share and losses.This was due to inadequate investment, competitive pressure, a dilapidated network and governance challenges.

Ucom is a subsidiary of LAP Greencom Network, a subsidiary of Libya Posts Telecommunications and IT company (LPTIC) wholly owned by Libyan Government.

From 2011, Ucom was unable to downstream capital to the company owing to the political turmoil in Libya and UN/EU sanctions on Libya that affected the majority shareholder that froze its assets.

According to a press statement issued by the Minister of Finance, Planning and Economic Development, Matia Kasaija, following lifting of UN sanctions, the majority shareholder resumed control of the company in 2013 and subsequently transferred the beneficial ownership of Ucom’s shares from Libya Investment Authority to LPTIC. The shareholders have since 2014 engaged in protracted negotiations on modalities of capitalizing the company.A draft shareholder agreement providing for a turnaround strategy was pending approval by government.

“Regretably, Government has now received notification from Ucom of the following decisions; 1) That Ucom will no longer avail funding to the company. 2) Directed the resignation of all five representatives of Ucom on the UTL Board,” statement partly reads.

“In a light of the above, Government has decided to take over the affairs and management of UTL with immediate effect and will engage Ucom to ensure an orderly transition,” Statement further read.