UTL loses court case, to pay billions in interconnection fees

Friday September 15 2017

Uganda Telecom offices in Kampala. The

Uganda Telecom offices in Kampala. The telecommunications company has been directed by court to pay interconnection fees amounting to about Shs6 billion to MTN Uganda. FILE PHOTO 


Kampala. Telecommunications firm, Uganda Telecom Limited (UTL) has been ordered to pay its competitor, MTN Uganda Limited, more than Shs6b to settle an interconnection bill for March to December 2007.

Court documents show that the money arose out of interconnection with GEMTEL, a telecommunications operator in South Sudan.
Five Justices of the Supreme Court led by Chief Justice Bart Katureebe, on Tuesday, unanimously dismissed with costs an appeal by UTL citing lack of merit.
Other justices were; Stella Arach-Amoko, Augustine Nshimye, Eldard Mwangusya and Faith Mwondha.

The Highest Appellate Court in the country upheld orders of the High Court and Court of Appeal in which UTL will pay Shs3.4b together with Shs1.4b at 19 per cent interest per annum.
This is in addition to interest on delayed payment at 19 per cent from the date of judgment till payment in full and general damages worth Shs100m with 8 per cent per annum as well as legal costs incurred by MTN.

“A careful perusal of the record of proceedings indicates that the learned justices carefully perused and properly re-evaluated the evidence before them before coming to their decision on the ground of appeal. This (Supreme) court as a second appellate court cannot interfere with the concurrent findings of fact by the High Court and the Court of Appeal unless the findings are not backed by evidence,” held Justice Arach-Amoko in the lead judgment in Kampala.

UTL had appealed against the October 2014 judgment of the Court of appeal in which judges; Remmy Kasule, Rabby Opio Aweri and Richard Buteera held that UTL breached the contract in regard to interconnection agreement with MTN.
MTN, through their lawyers Kampala Associated Advocates, argued that the said claim arose as a result of applying the domestic rate of Shs100 to the telephone traffic exchange between UTL and MTN for telephone traffic originating from and terminating on code +256 6477 XXX.

The High Court, however, ruled in favour of MTN, directing UTL to pay its competitor saying UTL network and that of GEMTEL were one and the same, that GEMTEL had no network outside that of UTL and that without code +256 477 which was the local code for Ugandan purpose, GEMTEL could not operate.
Court held that the network for UTL and GEMTEL was one because the code was for local traffic.


Case background

Agreement. Records indicate that in February 2001, UTL and MTN entered an agreement in which they agreed to interconnect their respective systems to allow termination of traffic in each other’s network.
GEMTEL enters. In 2006, the government of South Sudan requested its Uganda counterpart to permit the use of its code +256 by a company called GEMTEL Limited, a telecom operator in South Sudan until it got its own country code.
The records also show that Uganda gave permission for GEMTEL to use the country code +256 and that UTL entered into an interconnection agreement with GEMTEL allowing it to use the prefix 477 which was originally reserved for northern Uganda.

As per the interconnection agreement, in February 2008, MTN invoiced UTL more than Shs6.5b as interconnection fee for the period March to December 2007 but UTL paid only Shs3.47b and rejected the balance of Shs3.4b citing a wrongly applied rate of Shs100 which was the charge for local traffic instead of $0.50 which is chargeable for international traffic in computing the amount due to MTN for the use of the code +256 477 by GEMTEL.