Govt hits back at Libya over Uganda Telecom failure

Kampala.

The government has reminded the Libyans that “this is not the time for pointing fingers, but rather time for finding solutions to make Uganda Telecom (UTL) great again.”

The government was responding to a statement by Libyan Post, Telecommunications, and Information Technology Company (LPTIC) in which the majority shareholders blamed the Uganda government for failure to adopt the planned strategy that would have turned around the company.

“Despite every effort by the majority shareholder to save UTL, and in addition to its readiness to fund the implementation of a Transformation Business Plan, it was not possible to conclude negotiations with the Government of Uganda. In straightforward terms, the process could not continue in the face of a protracted lack of substantive engagement with senior stakeholders within the Government of Uganda,” a press statement issued by LPTIC on Sunday evening, reads in part.

However, ministry of Finance spokesperson Jim Mugunga yesterday defended government from the accusations of failing the company. “We are not the problem,” Mr Mugunga said, and continued: “The issues of UTL are well documented and they didn’t start yesterday. They have accumulated for some time and the majority shareholder knows this. But our position as government is very clear, this is not time for pointing fingers, it’s time for finding solutions to make UTL great again.”

He added: “Government took a decision after the majority shareholders directed their board members to exit the company. Our decision was intended to stabilise the company because there was a leadership vacuum… ”

Last week, Mr Matia Kasaija, the Finance minister, announced that the government had taken over operations and management of UTL after the majority shareholder, LPTIC confirmed to the government that it was no longer going to fund the operations of the telecom.
On Sunday, the Libyans questioned the Uganda government commitment to turnaround UTL.

LIPTIC, through UCOM, owned a 69 per cent stake in UTL, with the government owning the other 31 per cent.

No more Libyan money
Since 2006, UCOM has been responsible for key decisions in the company but has also been committing cash to UTL. LPTIC noted with concern that it was no longer willing to use money from the Libyan people to finance an entity where the other shareholder was non-committal. LIPTIC accused government of “unwillingness” to see UTL transformed.

The decision to halt any funding to LPTIC was made on February 24, 2017. This decision caught the government off-guard but allowed them time to opt to take over and start a nationalisation plan of the assets of UTL. The two shareholders have been negotiating the turnaround strategy for UTL for the last 14 months.

UTL was in such a sorry state that it reached a point where it could no longer even have working capital to run day-to-day operations.
The Libyans also blamed the government for failing to honour its debt obligations estimated to be about Shs16 billion from the provision of services such as data and fixed lines.

UTL is in dire need of a capital injection of about Shs100 billion in the short term if it is to be able to generate returns.

LPTIC is also the largest creditor of UTL because it extended shareholder loans that have accumulated to almost Shs170 billion. LPTIC says it wants to recover the money once the government completes nationalisation or brings in a new investor.