Africell concerned over new telecoms’ licencing regime

Monday March 4 2019

Required. The new licencing regime will require

Required. The new licencing regime will require telecoms to invest massively in network coverage. PHOTO BY EDGAR R BATTE  

By Christine Kasemiire

The cost of the new licencing regime will heavily eat into telecoms’ revenues, according to Mr Mohammad Ghaddar, the Africell chief executive officer.

Speaking during a Uganda Communication Commission (UCC)-ogarnised stakeholders engagement in Kampala, Mr Ghaddar said telecoms need assurance that they will recoup their investment under the new licencing framework.

“We need assurance that the investments [we put in] are going to yield some profits,” he said adding that it is not fair for an operator to wait for years before they can break even. Recently, Airtel said it had posted profits, eight years after acquiring the Zain Uganda unit.

The telecom had been clearing liabilities acquired from Warid and Zain that were carried from Celtel.

Under the new licencing regime accommodated under the National Broadband Policy, telecoms will, among others, be required to invest in the excess of $200m in network upgrades and expansion as well as listing on the stock exchange.

Mr Ghaddar said as operators, they face different challenges, arguing that telecoms and UCC must achieve an easier way of doing business.

The policy requires telecoms to have a national coverage for the voice segment and Internet access at every sub-county level.

However, Mr Godfrey Mutabazi, the UCC executive director, said on the sidelines of the meeting that the policy will apply to all, putting in mind a number of factors, among which, will focus on creating a mutually beneficial business environment.

“If one company says they should be guaranteed profit, should we also demand that we drive their operations. Some [telecoms] are making money [yet] they claim they are not [but continue] trading,” he said.


Other telecoms declined to comment on Mr Ghaddar’s concern, saying it was too early to asses the National Broadband Policy, which was endorsed by Cabinet in September last year.

While meeting the MTN Group chief executive officer in Davos, Switzerland on the sidelines of the World Economic Forum recently, President Museveni said telecoms were getting a lot of money from their operations but with very little value addition.

This in essence forced government to put in place deliberate investment decisions to promote value addition.
Whereas the new policy will burden telecoms, some analysts say, it will spur growth, especially in the ICT sector given its focus on wide Internet coverage.

The new policy has also played out in the renewal of MTN’s licence, which has twice been partially renewed.
In October last year, President Museveni wondered why UCC had reduced MTN’s licence renewal fees from Cabinet’s agreed $100m to $58m.

Asked why government has delayed to renew MTN’s licence, which expired in October last year, Mr Mutabazi told Daily Monitor the renewal will only be done after synchronisation of licencing conditions under the National Broadband Policy.

“It is not a delay, there is a new policy and it has introduced new licencing conditions. It is not a one-day thing,” he said, explaining that that the process could take longer than six months to ensure conformity with the new 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. The 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, which, according to government, will improve transparency.