UTL’s woes: Can UTL get out of this mess?

Tuesday July 16 2019

An optical fibre technician with Uganda Telecom

An optical fibre technician with Uganda Telecom fixes fibre wires. Photo BY MICHAEL KAKUMIRIZI 

By Ismail Musa Ladu

Uganda Telecom (UTL) seems to be stuck deep in the woods. In fact, UTL’s trouble doesn’t appear to have gotten any better since it went into administration nearly three years ago.
When the telecom company founded in June 2000 went into administration, the intention was to rescue it from looming liquidation and total collapse.

However, considering that it falls under what many describe as a “strategic facility” the government secured a court order to protect the assets of the telecom company from its creditors.

At the same time, the government also appointed an administrator – Mr Bemanya Twebaze who is also the Registrar General and chief executive officer of the Uganda Registration Services Bureau (URSB), to steer the now fully government owned telecom company into the path of profitability.

Nearly three years later, there is a sharp disagreement between the administrator and State Minister for Privatization and Investment, Ms Evelyn Anite who announced the appointment of Mr Bemanya as the administrator.

It looks like the reporting lines for the administrator whose role is to salvage the embattled telecom company is pretty much blurred if not laborious to navigate through.
To date, no investor has been found for UTL despite intensive attempts to do so.

Currently, government is back to the drawing board. It is searching for a fresh investor to take up UTL operations after parting ways with Taleology, a Nigerian telecom company, that was given a green light in October last year to take over the embattled company, bringing an end to a cut throat competition for the state-owned telecom, now branding itself as an information and communication technology network.

But while searching for a new investor for UTL, there was a disagreement over the suitability of the right investor to take up the remains of the “strategic company.” The administrator and Ms Anite couldn’t agree.

Over time, the two main principals who should oversee the successful reformation of UTL drifted further apart, culminating into Ms Anite’s pleas to sack the administrator. She was, however, reminded by Attorney General Mr William Byaruhanga and his deputy, Mr Mwesigwa Rukutana, that the Ministry of
Finance does not have power to control UTL operations, adding that any such attempt would legally not hold water in the courts of law.

Mr Bemanya Twebaze, the Registrar General and

Mr Bemanya Twebaze, the Registrar General and chief executive officer of the Uganda Registration Services Bureau, addresses a press conference at UTL offices. PHOTO BY MICHAEL KAKUMIRIZI

Quoting Section 174 (1) of the Insolvency Act, which provides that only listed creditors are competent to apply to court to remove the Administrator from Office, Mr Byaruhanga emphasised stated: “The Minister of Finance as a shareholder of UTL cannot apply to court to remove the administrator and any such application is bound to fail.”

He said the ministry can only succeed if it requests government parastatals –UTL creditors –to make the application to court.

With these developments, the fate of UTL appears to be hanging by the thread, pending peace talks or a cabinet position on the matter.

Meanwhile, a directive from President Yoweri Museveni requires that the administrator reports and accounts henceforth to the minister of Justice and Constitutional Affairs, General Kahinda Otafiire.

Possible solutions
Analysts believe there is a way out of this quagmire.
Mr Morrison Rwakakamba, a policy analyst, researcher and board member with Uganda Investment Authority, says that Mr Bemanya who was appointed UTL administrator in May 2017 after the company went into insolvency following the departure of the Libyans who owned a majority 69 per cent shareholding, should allow the struggling telecom company to be subjected to auditing processes.

“It is not proper to say that the law insulates you from being audited. It is in order to do so,” Mr Rwakakamba said in a sideline interview of the launch of construction works of a Chinese Company ENGO Holdings Limited – an assembling and manufacturing plant for computers and mobile phones in Namanve Industrial Park recently.

He continued: “It should be in the interest of Mr Bemanya to have transparent operations, and allow an audit of the company to happen irrespective of what the law says. How will potential investor invest their money if things are shrouded in secrecy? That veil must be lifted. The Auditor general should have access to the books of accounts of all necessary documents and information they need.”

Without an audit of UTL in its current position, Mr Rwakakamba believes it is difficult to understand what is happening in there, saying this situation only fuels suspicion and unwarranted speculation.
He says too much legalese currently taking centre stage should be avoided and the organization’s books be open up for scrutiny.

Dr Fred Muhumuza, an economics lecturer at Makerere University School of Economics, recently says: “UTL is like a patient on a life support, making it a difficult decision for those involved with the matter.”

Dr Muhumuza says there is no alternative for UTL except letting it go.
“If UTL dies, I don’t think anybody will fail to make a call because there are already alternatives available,” he said.

But before that, he says UTL is in this position partly because of government’s inability to fulfil its part of the bargain — pay its debt to UTL. As a way forward, he said government can buy shares into MTN and Airtel if it is interested in the telecommunication sector, saying that is another way of owning the industry.

Mr Robert Kirunda, a legal expert, believes UTL troubles can best be resolved outside the glares of media or else it can only get worse. He describes UTL as a strategic asset, saying government needs it and that it is within its powers to solve the problems the telecom company is going through.

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