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UTL SALE: Finance Ministry Favours Mauritius Telecom; Sets Tough Conditions for Hamilton

The Ministry of Finance has given Cabinet two options on selecting the suitable buyer of Uganda Telecom, Chimp Corps report.

Government of Uganda (GoU) represented by the Minister of Finance and UCom are 31 percent and 69 percent shareholders respectively in Uganda Telecom (UTL), which is financially distressed, technically insolvent and currently under administration.

Several companies have since tendered their bids to acquire UTL.

According to a brief to Cabinet, which ChimpReports has seen, the Finance Ministry proposes that the “Administrator awards and finalises with Mauritius Telecom as the only credible potential partner with Government as recommended by the Financial Intelligence Authority.”

The FIA was directed to conduct due diligence on the potential investors and issued a report clearing Mauritius Telecom as the “only credible and financially stable company” among the evaluated companies.

Mauritius Telecom’s asset consideration is $45m and plans to invest $100m in three years. It intends to take a share of 69% while government of Uganda will control the 31 % stake.

2nd Option

The Finance Ministry, however, gave the second option of giving the UTL to the highest bidder, Hamilton Telecom, with strict conditions including paying a non-refundable deposit of 10 percent of the offer within 7 days of the date of the offer and a requirement to sign the agreement and to pay the balance of the proposed amount within further 7 days.


The FIA had cautioned Cabinet against dealing with Hamilton Telecom, saying the company’s operational book accounts “revealed that the business employs 20 people and indicated an expected monthly turnover of Shs 200m.”


FIA further observed that all the funds to the company were originating from its own John Kamya and that Hamilton is a relatively new entity with limited business operations.

“It is therefore our opinion that it is risky for government to engage this company as a strategic investor,” read the FIA report.

While FIA did not find any indications of money laundering or terrorist financing, the organisation “strongly advised against engaging this entity as a partner, as the company clearly lacks the financial capacity to be a meaningful strategic partner to government of Uganda.”

But the Finance Ministry said the best way to prove Hamilton’s financial strength would be requiring the firm to conclude its acquisition of UTL in a short period of time.

“If he fails to conclude the transaction within the time stipulated, the 10 percent will be forfeited, offer automatically lapses and the same offer will then be made to the next evaluated partner, in a descending order,” the Ministry advised.

This, the Ministry advised, is seen as a “the defendable way” to prove that a person has no money for a transaction.

Government has since agreed to extend UTL’s Service License for 20 years; expanded frequency bandwidth (spectrum); and provided tax waivers on import duty for equipment, Corporate Tax, VAT and Excise duty on services for the initial 4 – 7 years.

Government also decided that UTL or the resultant entity would become the sole provider of ICT services to Government and have access and use of the National Backbone Infrastructure.

This made UTL more profitable as the buyer would have a starting customer base of 400,000 government employees who have been directed to have UTL lines.

The Ministry revealed that Safaricom which had shown interest in partnering with Afrinet Communications Limited to make an offer and was engaged under the directive of President Museveni has since withdrawn its interest.

As a result Afrinet Communications Ltd which had offered the second best purchase price of USD $67m has confirmed to the Ministry that they have withdrawn their participation.

This leaves Mauritius Telecom and Mauritius Telecom as the potential buyers of UTL.

Offers made by UTL suitors :

Rank Entity Offer
· Hamilton Telecom


·         Consideration for assets – $70m

·         Capital investment/ period – $285m / 3 years

·         Proposed Structure

·         62% for Hamilton Telecom

·         38% for GoU

2. Afrinet Communications Limited


·         Consideration for assets – $67m

·         Capital investment/period – $150m – $300/ 3 years

·         Proposed Structure

·         68% for Afrinet

·         32% for GoU

3. Teleology Holdings


·         Consideration for assets – $60.5m

·         Capital investment / period – $230 / 3 years

·         Proposed Structure

·         67% for Teleology

·         33% for GoU

4. Neubacher Montage LLP ·         Offer for the Assets – $60M

·         Proposed capital investment – $211M

·         Proposed Shareholding –

·         68% to Neubacher Montage LLP

·         32% to GoU

5. Baylis Consortium


·         Consideration for assets – $55m

·         Capital investment/period – $120m / 5 years

·         Proposed Structure

·         70% for Baylis Consortium

·         30% for GoU

6. Mauritius Telecom


·         Consideration for assets – $45m

·         Capital investment/period – $100m / 3 years

·         Proposed Structure

·         69% for Mauritius Telecom

·         31% for GoU

The UTL Administrator Bemanya Twebaze needs the highest amount of money for the creditors.

Bemanya said all the offers were below the assessed market value of the company which is currently equivalent to US$ 80M.

In light of his duty to get the best return for the creditors, he proposed to select the best three potential partners and engage them further with a view to revise their offer upwards.

The Ministry said in any agreement concluded taking into consideration of Government incentives, the Attorney General must clear and approve it; and the Administrator must obtain proof of availability of funds from a reputable bank before making an offer to any partner.

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