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UCC Stops Invoicing Heavily Indebted UTL As Arrears Accumulate To Shs70bn

Uganda Communications Commission (UCC) has not invoiced Uganda Telecom Limited (UTL) for the different resources amounting to Shs70.3 billion since 2015, the just released December 2019 Auditor General report has revealed.

Shs38.9 billion was before UTL went into administration and Shs31.3billion post administration.

In his report to Parliament, Auditor General John Muwanga notes that UCC management resolved to discontinue raising invoices to UTL as all invoices raised earlier were not being honoured and yet UCC gets taxed by URA. UCC continues to render additional resources to UTL that is heavily indebted to the tune of over Shs500bn.

Business Focus interviewedIbrahim Bbossa, the Head Public Relations & International Relations at UCC about this development and he admitted UCC stopping invoicing the troubled telecom firm.

“Yes!, the Commission stopped invoicing Uganda Telecom Ltd (UTL). This was out of financial prudence and against the advice of the government.  Initially, for every invoice made to UTL; the Commission was meeting tax obligation for no revenues collected. Accordingly, the government advised that arrears accrued should translate into government equity given the latter’s stake in the company,” Bbossa said in an exclusive interview.

Additionally, he noted, UTL continues to use critical communication resources like spectrum and numbering resources with the understanding that the government is seeking a suitable partner or investor to turn around the fortunes of the company. 

“UTL is a provider of critical communication services to the government of Uganda which includes MDAs (Ministries, Departments and Agencies) and the military. Ensuring business continuity of UTL is in the interest of the country as a whole and we believe that efforts made by the government to source for the recapitalisation of UTL will undoubtedly turn around the company’s fortunes,” Bbossa said when asked if UCC believes UTL can be turned around.

“Having the government as a shareholder in UTL is a plus for the company and its dominance in the landline market can be leveraged for success.

Therefore, as a regulator of the communications sector, the Commission will continue to allow UTL to make use of the necessary resources for its operation until an investor is identified. At that point, the company’s obligations will be secured and accruals payable as will be guided by the government,” he added.      

The Auditor General report also noted that two unnamed telecom companies are operating illegally in Uganda without a license. This has been on since November 2018 up to date, which is contrary to the UCC Act, the report says, adding that failure to renew these licenses deprives the Commission of earning revenue and poses a legal risk to operators.

However, Bbossa says there’s no telecom firm operating outside the law.

“First and foremost, there is no telecommunications company operating illegally in Uganda. However, in the event of delays in concluding licensing in cases of protracted negotiations, the Commission grants extensions to the operations of an operator to allow business continuity so as not to disrupt services in line with Section 6 of the Uganda Communications Act,” he said.

In such instances, he said, operators who have been granted an extension of a license continue to meet their financial obligations in line with the previous terms and conditions of the license until such a time when a new license is issued.

“Currently, due to changes in the general legal framework, government policy and technological developments in the communications sector in Uganda, the Commission reviewed the licensing framework and approved new license categories,” he said, adding: “To facilitate a seamless transition to the new licensing framework, all operators were given sixty (60) days from 29th of October 2019 to indicate the license categories they wish to consider. This is to ensure that the Commission is not in any way deprived of any revenues and operators are under legal cover from the Commission.”

Ibrahim Bbossa, the Head Public Relations & International Relations at UCC

He concluded by saying that as the regulator of the communications sector, “We are committed to facilitating, enabling and promoting the development of a robust communications sector in Uganda. “

Taddewo William Senyonyi
https://www.facebook.com/senyonyi.taddewo
William is a seasoned business and finance journalist. He is also an agripreneur and a coffee enthusiast.

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