British telco Vodafone’s two-year attempt to break into the
competitive Ugandan market has proved difficult, and pushed the firm to
court to seek bankruptcy protection.
The High Court
Civil Division in Kampala issued a protective order on February 15,
enabling the ailing company to explore options for business recovery.
The same order confirmed the appointment of Donald Nyakairu as the
company’s provisional administrator.
Vodafone Group Plc
is one of the world’s leading telecommunications groups, with a
significant presence in Europe, the Middle East, Africa and Asia-Pacific
through the company’s subsidiaries, joint ventures, associated
undertakings and investments.
In Kenya, the company last year sold the bulk of its stake in Safaricom to its majority-owned South African subsidiary, Vodacom Group Plc.
4G data services
Afrimax Group and Vodafone Group merged in 2015 to form Vodafone Uganda.
The merger was remarkable with the launch of 4G data services.
The
company filed an insolvency petition before the High Court. This a
legal procedure that enables it explore the possibility of either
winding up or reviving the business without undue pressure from
creditors.
“I have been appointed by the directors as
an independent professional to manage the company and look at its
financials for the next three months. One of the mandates is to
determine whether the company can be maintained as a growing concern
because at the moment it is unable to pay its debts,” Mr Nyakairu told The EastAfrican.
“We
are saying that instead of going into liquidation, we should study the
extent of its indebtedness and see how to take care of creditors and
workers.”
The EastAfrican has learnt that the
administrator is exploring a third option — attracting new investors
after ruling out problems with market saturation.
Vodafone
came into play when market leaders like South Africa’s MTN, Africel and
were long established in data provision services in Uganda.
“I
am working on a business rescue plan, part of which involves engaging
with investors interested in taking over the company. We already have
consortium of investors who might be inclined to take over the debts,”
Mr Nyakairu added.
While the company reorganises, the
public which was already used to the fast 4G LTE network could
experience problems accessing the services.
Rescue plan
A
public notice put out by Mr Nyakairu informs all creditors of the
company that a meeting of creditors has been scheduled for March 12,
2018, at the company’s offices in Kololo.
“The
creditors will consider my appointment as provisional administrator, my
proposals to restructure the business and execute a debt management plan
as well as a decision whether the company should continue with the
administration process, be wound up or go into liquidation,” he says.
Even
though Vodafone is a private company, sources at the Uganda
Registration Services Bureau, the body that registers companies in the
country, told us that they will play a supervisory role in the process.
A
quick look into the company’s operations, according to the provisional
administrator, reveals high operational costs. Bringing down the costs,
he added, would require restructuring the company.
Besides
that the company had poor coverage as opposed to its competitors. This
is unlike the case in Zambia where the company’s operations are
successful.
Vodafone sold its interests in Ghana.
Vodafone sold its interests in Ghana.
In
its bid to expand, Vodafone had also ventured into voice telephony
services through a national roaming agreement with Uganda Telecom and
Smart Telecom.
“We should stabilise the company again once the investors come on board,” said Mr Nyakairu.
No comments :
Post a Comment