MTN yields to govt pressure, agrees to pay $100m for licence renewal

Thursday March 12 2020

10-year licence: MTN is expected to get a

10-year licence: MTN is expected to get a 10-year licence for $100m. FILE PHOTO  

By CHRISTINE KASEMIIRE

MTN has given in to government pressure, agreeing to pay $100m for renewal of its licence, which expired in October 2018.

The renewal will, according to information obtained by Daily Monitor, run for the next 10 years.

Speaking to Daily Monitor in an interview yesterday, Mr Keith Muhakanizi, the secretary to the Treasury and Finance ministry permanent secretary, confirmed MTN had agreed to pay the money.

“Government negotiated $100m, and they are going to pay. They have agreed,” he said without giving more details.

Mr Ibrahim Bosa, the Uganda Communications Commission (UCC) spokesperson also confirmed the figure, saying: “We are waiting for them to make the payments”, for the process of licence renewal to be kick started.

“They are likely to pay in two instalments and currently, meetings are ongoing to determine terms of payment,” he said.

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MTN could by far have the most expensive licence in East Africa since, for instance, other telecoms such as Safaricom in Kenya paid about Shs83.2b for its 10-year licence in 2014.

Experts have warned that the telecom could transfer the cost burden to consumers.

“That is a genuine concern but there are safeguards in the licences. For example, the pricing regulations and the UCC Act, gives us the mandate to regulate products and services that are offered in the market,” Mr Bosa said, noting all prices of new innovations and products must be approved by UCC.

MTN’s struggle to be licensed dates back to 2018 when its 20-year licence expired. UCC has since been offering the telecom temporary extensions pending the new licensing framework.

UCC had under Mr Godfrey Mutabazi, the former executive director, allowed MTN to pay $58m, a decision that was questioned by the President.

In a letter, President Museveni directed UCC to explain why MTN’s licence was reduced to $58m from $100m that had been agreed on by Cabinet.

“You ought to be aware that over the 20-year span during which MTN has been operating in Uganda, it has reaped vast profits most of which have obviously been repatriated. This is common knowledge derived from the company’s own declarations and from our own sources,” the President wrote to UCC and ministry of ICT on October 28, 2018.

Government explained that the hike in licence fees was premised on projected annual gross revenues of the telecom, which put into consideration growing populations.

According to the new telecom licensing framework and regulations, national telecom operators will pay either 2 per cent of their gross annual revenues or pay $100m for a 10-year licence.

In addition, under the new framework, Airtel Uganda, which formerly held public service provider licence and public infrastructure provider licence, will now advance to a national telecom operator licence.

This was confirmed earlier last month during the release of the company’s results for the period leading to December 31, 2019 by the Airtel Africa chief executive officer Raghunath Mandava, who said Airtel Uganda would apply for an national telecom operators licence.

However, it is not yet clear whether Airtel will also pay $100m for its licence as there is need for a harmonised national telecom operators licensing regime.

MTN performance

Meanwhile, MTN Uganda yesterday released its 2019 annual results, indicating growth in revenues to Shs1.5 trillion from Shs1.3 trillion in 2018.
The unit, according to the results, contributed 4.4 per cent to the overall group revenue.

Mobile data and MoMo, the results indicated both delivered double-digit revenue growth of 39.7 per cent and 13.9 per cent, respectively.

The telecom also registered growth in the data segment attributed to a 52.1 per cent increase in active users and a 2.2 per cent improvement in smartphone penetration to 21.4 per cent.

During the period, MTN Uganda incurred capital expenditure of Shs265b while the telecom closed 2019 with 12.6m active mobile subscribers, 3.4m and 7.4m data and mobile money subscribers respectively.

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