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Government Has Never Earned A Coin From Uganda Telecom!

Shocking details continue to emerge on how Uganda Telecom Ltd (UTL), the once popular telecom giant became financially disabled.

Parliament’s ‘Select Committee on UTL on the Management and Performance of UTL’ report obtained by Business Focus, reveals that the Government of Uganda (GoU) has never earned any dividend from its shares in UTL since 2000.

The report adds that the company indebted to the tune of over Shs700bn needs a capital injection of about Shs500bn to have its network revamped.

Dated May17, 2017, the report reveals how the GoU negotiated bad deals that gave the majority shareholder, UCOM a lot of powers in decision making.

Noteworthy, UCOM has since pulled out of UTL that is currently under provisional administration.  UCOM owned 69% shares in UTL while the GoU owns 31% shares.

“…the Shareholder Agreement and Technical Assistance and Commitment Agreement gave a lot of powers to the majority shareholder (UCOM) in making major decisions such as hiring of key managers, provision of technical assistance and borrowing loans for the company,” the report reads in part.

It adds that between 2002 and 2006, under the cover of Technical Assistance and Commitment Agreement, UCOM hired 10 top managers, including the Managing Director.

During this time (five years), the Managing Director was being paid US$28,000 (Shs101.6m going by the current exchange rate) per month, while the other nine managers were being paid US$25,000 (Shs90.7m at the current exchange rate) each per month. This means that the top 10 mangers were earning a total of Shs917.9bn in salaries per month (going by the current exchange rate).

The report adds that the team hired was inexperienced and incompetent, lacking basic corporate management skills.

“There was no effective communication in the organization and the management was borrowing money from banks without the knowledge of the minority shareholder (GoU),” the report notes.

Unfortunately, during this period, the company was making terrible losses.

According to the report, UTL recorded losses of Shs16.21bn in 2008, Shs11.86bn in 2009, Shs69.26bn in 2010, Shs145.63bn in 2011, Shs27.67bn in 2012, Shs59.91bn in 2013 and Shs229.51bn in 2014.

The report notes that UTL would have been closed long ago by Uganda Communications Commission after breaching a number of laws, but the Government has been intervening severally, appealing to UCC to give UTL sometime as a turnaround strategy is being sought.

“UCC informed the Committee that UTL was technically insolvent and was heavily indebted to the operators and had failed to meet the quality of service required in the telecommunication sector,” the report reveals.

It is worth noting that Budadiri East MP, Nandala Mafabi on November 17, 2016 tabled a statement on the floor of Parliament, highlighting how UTL was heavily indebted and mismanaged.  Parliament resolved to form a Select Committee to investigate what Mafabi tabled.

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