Uganda government takes over troubled telecom

A Uganda Telecom Limited promotion. The government has taken over the telco. PHOTO | FILE 

By The EastAfrican Reporter

In Summary

• UCom, a subsidiary of Lap Green Network of Libya, said it will not avail funds.
• Ucom also directed its five representatives in the UTL board to resign.

The government has taken over Uganda Telecom Limited (UTL) after the firm’s majority shareholder failed to inject capital to turnaround the state of the ailing telco.

Uganda’s Finance Minister Matia Kasaija made the announcement Wednesday in Kampala saying the government was notified that UCom, a subsidiary of Lap Green Network of Libya, will not avail funds.

Mr Kasaija also revealed that Ucom has directed its five representatives in the UTL board to resign.

In light of the developments, Mr Matia said, "the government has decided to take over the affairs and management of UTL with immediate effect, and will engage Ucom to ensure an orderly transition."

Lap Green, a Libyan government firm, is the majority shareholder owning a 69 per cent stake in UTL with Uganda government holding the remaining 31 per cent stake.

“Ucom has been responsible for management of the company,” Mr Kasaija said.

Uganda’s oldest telecom, UTL, has been on a decline since 2007, with its market share dropping from about 30 per cent to below six per cent today.

The minister said the telco has also been characterised by heavy indebtedness and losses.

Part of UTL’s troubles are linked to the 2011 political turmoil in Libya that saw the overthrow of President Muammar Gadhafi as well as the effect of UN and EU sanctions. As a result, Ucom was not able to inject capital into the telecom after Lap Green froze its assets, Mr Kasaija said.

UTL provides fixed line and data services to government ministries, departments and agencies.

The minister said it has about 500 employees.