The Ugandan government has returned to the market in search for investors to take up the financially struggling Uganda Telecommunications Limited (UTL).
This came after Taleology Holdings, the investor selected by the UTL administrator, Bemanya Twebaze, turned out to be “very broke,” according to State Minister in charge of Privatization, Evelyne Anite.
“Taleology won the bid. We asked them to commit funds, at least 10 percent of $70m which they intended to invest in UTL but nothing was put on the table. It was just hot air,” said Anite.
In a controversial and contested bidding process, Taleology Holdings ‘floored’ Mauritius Telecom, which is owned by the Mauritius government, after staking $71m.
Mauritius Telecom had committed to raise $45m for 69% shares in UTL while the rest would be owned by government.
Anite said his warning against handing over UTL to Taleology and Hamilton Telecom, which was being fronted by Bemanya, was ignored.
“The one fronted by Bemanya was worse. The Financial Intelligence Authority (FIA) report said Hamilton was not only broke but lacked proper book of accounts. They were just gamblers,” charged Anite.
The FIA said Hamilton’s operational book accounts revealed that all the funds to the company were originating from its owner John Kamya, adding, “It is risky for government to engage this company as a strategic investor.”
Bemanya, who is the Registrar General and Official Receiver, Uganda Registration Services Bureau (URSB), was in April 2017 appointed Administrator with powers to look for an investor/business partner to recapitalise and operate UTL business.
Bemanya was as well tasked with selling and transferring any property of the company in piece-meal or as a whole and use the proceeds to settle creditors’ claims.
The Administrator also had to make UTL “healthier” and “attractive for investment.”
ChimpReports has learned that Cabinet recently expressed concern that two years down the road since Bemanya was given the job of reviving UTL, the process of acquiring an investor has been dogged by allegations of corruption and favoritism.
“This has denied the country an opportunity to bring UTL back to life. UTL had created many jobs for our people. Now we are all conscripted to expensive telecommunication services rendered by foreign multinationals. If Bemanya has failed to do the job, someone else should be given this task,” said a high ranking government official who preferred anonymity so as to speak freely.
Despite being indebted, Cabinet believes UTL stands a higher chance of returning to its old glory as long as a new investor is sought.
An asset revaluation for land and equipment showed UTL was worth $84m.
UTL owns prime land in Kololo (15 acres), Nakasero (parking lot opposite Sheraton Hotel), Wandegeya, Nsambya and Mengo and Telephone House among others.
President Museveni in 2017 ordered all government institutions buy internet from UTL.
Cabinet also agreed to have UTL’s license renewed and other conditions required by suitors fully met. For example, Cabinet ordered that all government officials (400,000) to use UTL lines. This meant an already established market for investors in UTL.
Additionally, an assessment of debts discovered ghost invoices worth Shs 398 bn. This reduced UTL’s actual debt to Shs 556 bn from Shs 954 bn. For example some invoices showed supply of fuel for all UTL stations across the country yet less than a half were operational.
The prospects of tax waivers, access to national IT backbone, an established market of government institutions for internet and call services and fresh evaluation of UTL’s prime properties made the company look much healthier and attractive.
Anite said had government considered the report by the FIA, UTL would have secured a “credible investor by now,” adding, “We have lost time. We’ve lost money and opportunities.”
She added: “If we were strict and respected FIA, we would not be in this situation. We would be up and running.”
The Minister said serious investors who wanted to invest in UTL have now moved on.
Some of the investors Anite said were credible included Mauritius Telecom whose asset consideration was $45m but planned to invest $100m in three years.
Mauritius Telecom has 1.3 million customers. It’s owned by government (33.3%), State Bank of Mauritius Investment Manager (19%), National Pension Fund (6.5%), Employees of Mauritius Telecom (1%) and France Telecom (now Orange S.A) (40%).
Others included China Telecom based in China, Extensia of UK, Baylis Consortium headquartered in New York; EW Tech Company; Neubacher Montage LLP (UK); and Afrinet Communications (Kenya).
Asked if the process of sourcing for an investor was managed satisfactorily, Anite responded: “A sub-committee of Cabinet found that several investors were quacks just as FIA had earlier advised but I was bullied into silence. We’ve taken lessons, we will do better. We are now back in the market.”
Government in 2017 took over management of the ailing Uganda Telecom Limited after Libyan investors failed to turn it around.
UCOM Limited, a subsidiary of LAP Greencom Network (LapGreenN), a subsidiary of Libya Posts and Telecommunication & IT Company owned a 61% majority shareholding in UTL.
From 2011, UCOM was unable to finance Uganda Telecom following the political turmoil in Libya and the United Nations and European Union sanctions.