Financial demands on UTL pile up

21 Jun 2011

Uganda Telecom Limited (UTL) is facing demands for UGX6 billion (USD2.42 million) in unpaid contributions to a rural development fund. Local paper New Vision reports that the Uganda Communication Commission (UCC) has added the amount to UTL’s growing list of unpaid bills. Every telco in the country is obliged to donate 1% of its gross revenue to the fund, for the development of communication facilities in unprofitable rural areas. Concern about the financial stability of UTL has been growing for some time. The telco is already involved in legal disputes with rivals MTN and Airtel regarding interconnection fees as previously reported by TeleGeography’s CommsUpdate. Uganda’s Media Owners Association has reportedly ceased any advertising for UTL, citing unpaid fees of UGX3 billion.

The situation for the UCC and UTL is not an easy one. 69% of the company is owned by the Libyan government through its investment vehicle, Libyan Africa Portfolio (LAP), with the remaining 31% owned by the Ugandan government. UN sanctions in March required the freezing of Libya’s assets for the duration of its on-going civil war, but in order to prevent the loss of jobs, the Ugandan government took over complete control of the company. Sanctions or fines imposed by the UCC on UTL in the short term will only undermine the government’s efforts to keep the telco afloat.

According to TeleGeography’s GlobalComms Database, at the end of March, UTL had 1.875 million wireless subscribers and a 13.1% market share of the wireless market.

Uganda, Airtel Uganda, MTN Uganda, Uganda Telecom Limited (UTL)