UTL poses national security threat - UCC

Monday June 24 2019

Hard times.  Uganda Telecom offices in Kampala.

Hard times. Uganda Telecom offices in Kampala. UCC has warned that the network may cause security risk. File photo 


Kampala. Uganda Telecom (UTL), the state-owned telecommunications services provider, poses national security risk for failing to install a unit to enable government monitor communication on its network, according to the statutory regulator.

Mr Godfrey Mutabazi, the executive director of Uganda Communications Commission (UCC), in an April 29 letter to Registrar General Twebaze Bemanya, the current administrator of the telecom, noted that its failure to install Intelligence Network Monitoring System (INMS) rendered its network susceptible to abuse by SIM Boxers.
A SIM Box is a device that allows use of multiple SIM cards, even of different telecom providers, and routing international calls as local calls.

UCC noted that UTL’s non-compliance, unlike other telecom operators in the country, could provide “dealers in grey traffic” a duct to direct fraudulent calls, leading to loss of government revenue.
“In the same vein,” Mr Mutabazi noted, “by not being connected to this system, UTL could expose the country to security risks since traffic through the UTL network is not effectively monitored by the security agencies.”

INMS, according to information gathered from various websites, helps in checking multi-vendor network data, performance, customer experience records, service quality, signalling statistics, documented data selections, customised data filtering and user configurable access.

The government deployed the technology last year to fight alleged revenue under-declaration by telecoms, which made them pay less in taxes, but the Executive, according to highly-placed sources, endorsed INMS to give back-end eagle eye for spies to scan for infractions to stem particularly rising cybercrimes.
Mr Bemanya did not receive or respond to our telephone calls and messages, and URSB spokesperson Provia Nangobi referred our inquiries to Mr Otaremwa Otuhumurize, a technical consultant to Mr Bemanya on UTL administration.

Mr Otuhumurize yesterday said they delayed to integrate to INMS technology because the telecom had obsolete machines.
“We had an old equipment, which was not [compatible] with the system, but the good news is that we are now compliant,” he said by telephone.
Mr Mutabazi, however, said he was not in the know whether UTL had installed the required unit.
“If they have complied, it is better for the country,” he said.
UTL until now had attributed its failure to procure the equipment to support connectivity to the INMS to cash flow problems.


The telecom in which the Libyans through UCOM Ltd owned majority stake went under after the big shareholders quit in February 2017.
To prevent its liquidation, the government scrambled and placed the telecom under the administration of Mr Bemanya, who was tasked to stabilise and scout potential investors to salvage it from the doldrums triggered by more than Shs500b debt portfolio and management rot.
On October 1, 2018, the Cabinet handed UTL to a Nigerian firm, Taleology Holdings GIB Ltd in a deal then touted to end a year of controversy and a bitter competition by seven bidders.

The Nigerian company had, however, failed to pay $71m (Shs268b) it offered by the January 23, last deadline the government extended it.
Mr Bemanya took over as UTL administrator on May 22, 2017, which was initially to last for only six months, but it was extended twice for six months each before a year-long extension due to lapse in November, this year.
His three years at the top of UTL has sparked a public spat with bureaucrats at the Finance ministry, the political overseer of the telecom, who say he has spurned attempts to have performance of the company under him audited.

Finance minister Matia Kasaija wrote to the Auditor General, Mr John Muwanga, on November 28, 2018, asking him to conduct “a special audit covering a period of about three years (from May 2017) and report to me accordingly.”
After a five-month delay, the Auditor General, whose office neighbours the Finance ministry headquarters, replied to Mr Kasaija, noting that the company is currently under administration; a court-supervised process, and its insolvency situation requires any action to be undertaken to be authorised by creditors and all shareholders.

Investigations by this newspaper show that UTL creditors are government, to which the telecom owes Shs195b, ESATD/PTA bank, which is demanding Shs32b, UCECPS, which is owed Shs12b and the National Social Security Fund (NSSF), which is demanding Shs10b.
UTL owes creditors, categorised in an official document summarising the claims as “others”, in excess of Shs284b.
In his April 24 reply, Mr Muwanga noted that Mr Kasaija’s request for a “special audit at this point in time may potentially pose legal challenges, unless it has been sanctioned by court.”

This position, tendered to his political executive just two months ago, contradict an accusatory tone Mr Muwanga struck against UTL in an account published yesterday in the Sunday Monitor.
He was quoted to have said: “When we went to audit UTL, those people told us that there [was] nothing we could do because the thing is in receivership yet I have the mandate to audit all government entities.”
It is unclear why the Auditor General did not tender the same explanation to Mr Kasaija.

Instead, he noted that Mr Bemanya was in “advanced stages of identifying an investor as agreed by shareholders and creditors, and any information about ongoing investigation, if commenced now, is likely to affect any potential investor’s views about the company.”
He also informed the minister that UCom, the Libyan owners who bolted out on their own more than two years ago, had in the past complained about discussions by UTL administrator Bemanya and Uganda government, which is supposed to be an independent shareholder.
“My intervention now following your request [for a special audit] as a shareholder,” the Auditor General informed Mr Kasaija, “is likely to be equally interpreted by UCom as acting on behalf of only one group of shareholders.”

Following a litany of correspondences over the audit demand, the State Minister of Privatisation and Investment, Ms Evelyn Anite, wrote to Mr Bemanya early this month, communicating that “it has been deemed necessary to evaluate the state of affairs of UTL since 2016”.
She assigned the Internal Auditor General in the Finance ministry to examine the company’s books of account.
Mr Bemanya in a June 18 reply told Ms Anite that he identified with Mr Muwanga’s April counsel to Mr Kasaija that it was a wrong timing to conduct special audit.

He wrote: “The situation has not in any way changed and we advise that it is not prudent to carry out this exercise at this point in time.”
This response prompted Ms Anite, in answer to inquiries by lawmakers during plenary in Parliament last week, to declare that the government, whom Mr Bemanya in a May 3, 2018 letter described as “current shareholder with absolute powers” over UTL, had lost control of the company.

Ernest & Young, on government request, conducted the last statutory audit of UTL for the Financial Year ended December 31, 2013.
Whereas Mr Bemanya was unavailable over three days to speak to this newspaper, he, during a press conference last Friday, dismissed accusations that he was unreceptive to an audit.

Listing his gains since 2017, he said they had, through rigorous verification, slashed UTL’s Shs940b debt by almost half; now pay staff and service providers on time; kicked previously dormant UTL sites to life and, are closing in on a strategic investor.
Mr Bemenya, however, did not explain how he is scouting for an investor without publicly calling for fresh bids, as required under the Public Procurement and Disposal of Assets Act, after Taleology failed to meet terms of the offer to snap up the telecom deal.

The public altercation sparked back-to-back crisis meetings at Finance ministry, with the last one last Thursday tasking the Attorney General, as the government chief legal advisor, to guide whether UTL under administration should be exempted from audit.
The expected opinion notwithstanding, Ms Anite told Daily Monitor yesterday that she had received instructions from President Museveni to kick Mr Bemanya out as the UTL administrator.
“The process is on,” she said, adding, “The Attorney General is working on the document because the President advised us to follow all the legal requirements and once that is completed, he (Bemanya) will be sacked.”

We could not independently verify this account and the Attorney General was reported on a trip to China, where President Museveni is on a visit.
As the power fights rage, UCC has threatened to take down UTL altogether by revoking its national telecom operator’s licence over non-compliance with statutory requirements.
Mr Mutabazi said they had paused the decision just because of national pride and need to support the government in ensuring the operator stays afloat.

UCC complaints

In a seven-page April 29 letter to Uganda Telecom, UCC executive director Godfrey Mutabazi also faulted the company for:
•Failing to remit 2 per cent of its gross revenue to UCC, which has now accumulated to about Shs60b.
• Failing to start the process of renewing national operations licence, which expires next June, within this month.

•Poor quality services and under-utilisation of assigned mobile and fixed numbers, at 6 per cent and 0.15 per cent, respectively.
•Non-payment of spectrum and other regulatory fees among others.
• Failure to seek UCC’s approval prior to using short codes that fall under the other network services category as well as National Signaling Points.

What law says:
Section 41 of the UCC Act provides that UCC may suspend or revoke a licence issued under its Act in the event (a) of serious and repeated breach of the licence conditions and (d) where the operator has ceased to be an eligible person.