Government increases MTN licence fees from Shs371b to Shs438b

Wednesday April 3 2019

Negotiating. MTN continues to negotiate for the

Negotiating. MTN continues to negotiate for the renewal of its licence which expired in October last year. FILE PHOTO  

By Christine Kasemiire

Kampala. MTN will have to folk out $118m (Shs438b) for a 10-year licence, according to information obtained from Uganda Communications Commission (UCC).
This will be a revision from the $100m (Shs371b), which a Cabinet resolution had proposed in November last year.
The licence renewal, Mr Ibrahim Bbosa, the UCC spokesperson, told Daily Monitor last week, will be based on MTN’s projected annual gross revenue.
This was arrived at by the Ministry of Finance but MTN has since written to UCC seeking for clarification on how the $118m was arrived at.
“Government closed at a position of charging 2 per cent of projected annual gross revenue for the licence,” Mr Ibrahim Bbosa.
The 2 per cent calculation, according to government, will require MTN to pay $118m for a 10-year licence or $150m (Shs557b) for one of 15 years.

The MTN Group in 2018 recorded Shs34.5 trillion in gross revenue of which, Uganda contributed 4 per cent, representing Shs1.3 trillion.
Daily Monitor could not obtain detailed information to show how the $118m renewal figure was arrived at.
However, Mr Bbosa said MTN had already written to the regulator to understand how the Finance Ministry was able to predict how much the company will be making in the next 10 years.

“MTN has written to us asking for clarification on certain areas, especially, how the figure was arrived at,” he said, explaining that a number of factors such as economic and population growth had been considered when projecting the figures.
Currently, MTN is waiting for a response from Cabinet after which it will have to choose between the 10 and 15-year licence.
Ms Justina Ntabgoba, the MTN corporate affairs manager, declined to comment on the matter, saying it was an ongoing negotiation.
“I cannot comment on that matter at the moment because anything I say will be premature,” she said.

MTN’s 20-year licence, which was obtained in 1998, expired in October last year and has since been partially renewed.
The telecom has since 2017 been engaging government but has only received temporary renewals.
The six month deadlock has been blamed on prolonged negotiations surrounding the cost of the licence as well as the desire to synchronise the new licence regime with the National Broadband Policy, which was endorsed by Cabinet last year.
President Museveni last year wrote to UCC, asking the regulator to explanation why the licence fees had been lowered to $58m (Shs215.4b) from $100m (Shs371b) as proposed by Cabinet.
MTN said then the $100m was high since it will be required, under the National Broadband Policy, to invest more than $200m (Shs742.9b) annually in network expansion and infrastructure upgrade.
Mr Frank Tumwebaze, the ICT minister, yesterday said he had not been briefed on the progress of the negotiations.
“We can only give you a comment on a matter we have handled to conclusion, this is not yet handled to conclusion,” he said.
The new proposal will see MTN pay $18m (Shs66.8b) more than the $100m that Cabinet had proposed in November last year.

MTN given another temporary licence renewal

Meanwhile, MTN’s licence, which had been temporarily renewed in January has been ex tented up to May.
Since expiration of the licence, MTN has been given temporary licence renewals stretching about three months to allow negotiations that would reach an agreeable figure for the parties involved.
Following the end of the most recent three month temporary renewal in January, UCC has once again given MTN a temporary licence stretching 90 days until end of May.
“As a regulator, we have granted MTN a legal cover, an extension for another three months as the licence process gets concluded,” Mr Bbosa said.