Irene Kaggwa, the UCC Executive Director
The Auditor General has queried the competence of Uganda Communications Commission (UCC) at managing Uganda’s communication sector, after discovering that the Commission failed to claim Shs2.083Bn Smiles Telecommunications Limited owed Government before its unceremonious departure from Uganda’s market.
In the December 2022 report to Parliament, Auditor General John Muwanga queried the relationship between Smiles Telecommunications Limited and UCC, citing a provision in Part II of the Uganda Communications (fees and fines) Amendment Regulations 2020 states that an operator, who without authority from the Commission discontinues its services licensed by the Commission is liable to a fine of up to 10% of the Gross Annual Revenue of the Operator.
Muwanga noted that Smiles Telecommunications Limited discontinued its operations in January 2022 without any authorization from the Commission and UCC did not suspend or revoke the license as guided by the Act and neither did the Commission not fine Smiles Telecommunications Limited for violating the terms and conditions of the issued license.
“Furthermore, I noted that M/s Smiles Communications Uganda Limited has an outstanding obligation to Shh227.300Mn and USD.505,079.47 about Shs1.856Bn payable to UCC. The Commission had not put any measures to recover this money from Smiles Communications Uganda Limited.
With the discontinuation of M/s Smiles Telecommunications Limited’s operations, the Commission is at risk of losing the outstanding revenue from the Company as well as loss of funds by the subscribers, ” Muwanga wrote in his report.
In response to the audit query, Irene Kaggwa, Executive Director UCC informed the auditors that effective 1st July 2020, the Commission introduced a new licensing framework where all existing operators were required to apply for licenses of their choice and transition to the new licenses. In the meantime, all existing operators were given the authorization to continue providing services as the Commission was evaluating their license applications.
She added that as part of the transition Smile applied for a Regional PSP and National PIP but midway, they changed their application to a Regional PIP and Regional PSP license. The process is still ongoing, save for the general authorization issued to all transiting operators, Smile Communications does not hold a valid license.
“The procedure leading to a fine of up to 10% of the operator’s gross annual revenue under the fees and fines regulations would arise where the operator on their own discontinues services or operations. In the case of Smile, the discontinuation of services was a result of an action by M/s American Tower Company Ltd (ATC) disconnecting their network for failure to pay accumulated tower carriage fees,” explained Kaggwa.
The Commission informed Auditors that Smile Telecommunications took ATC to court citing irregular and unfair treatment leading to the disconnection and the case is still ongoing and monitoring its progress as it also engages both ATC and Smile for a possible amicable settlement of the underlying dispute.
However, the Auditor General advised the Accounting officer to put in place measures to ensure that the outstanding obligation is recovered from M/s Smile communications Uganda Limited, as he awaits the outcome of the ongoing initiatives on the matter.
