As way of revamping Uganda Telecom Limited (UTL) government has directed that all its ministries, departments and agencies (MDAs) outsource airtime and internet services from UTL only a decision that should leave private providers with little business given that government is the biggest buyer of services in Uganda.
The decision which some economists say goes against the principles of the free market economy only came two days after the Supreme Court on September 12, upheld the ruling of the High Court that UTL pays its rival MTN Uganda Shs5 billion that includes interconnection fee and costs of the suit.
MTN Uganda and Airtel Uganda are the leading providers of telephone and internet services to government and the private sector. It is not clear whether the contracts of private internet providers will be terminated because the directive appears to be immediate.
The statement signed and issued on September by the Finance Ministry’s Permanent Secretary Keith Muhakanizi, says: “All MDAs should procure internet services from UTL to lower the cost of sourcing internet to the government.”
The government has also directed that all mobile and fixed telephone communication on government business must be done only through UTL, meaning UTL’s competitors MTN Uganda, Airtel Uganda, Africel, Smile, Vodafone and Smart will lose out on airtime and internet supply business to government.
“What government has done is bad for the country that so much cherishes the role of the private sector. Government should address the internal managerial issues affecting UTL instead of denying private players business,” said a top telecom executive who preferred to remain anonymous.
Another analyst said that for government to revamp UTL it should improve the quality of its services as well as boost its infrastructure like the private players have done. “I also hope they will address issues of corruption within UTL,” he said wondering why such a decision was taken at the time when government was agitating for more investors into the country.
“Uganda’s ICT sector is still in infant stages that means more investors are needed but can they come when they hear such news that the Ugandan government only gives business to its agencies?” he added.
Analysts say that the unfamiliar directive means private telecom companies and others like Tangerine and Rockespot will have to rely on individual subscribers, diplomatic entities, private companies and NGOs for business.
Muhakanizi has also directed all MDAs that still owe UTL money to pay as soon as possible; failure to do that comes with repercussions.
“All ministries, departments and agencies that still owe UTL money should clear the outstanding amounts immediately, failure of which the quarter two FY2017/18 releases shall be withheld until payment is made,” part of the statement reads.
Muhakanizi in a directive copied to the Prime Minister, Ministers of Finance, Information and ICT, Justice and Constitutional Affairs and the Administrator General, says the affected agencies must pay UTL within three weeks.
In April government put UTL under receivership in a move state Minister for Investment Evelyn Anite said it was the only chance to save the troubled telecom company. Anite would later suggest that all Ugandans compulsorily buy UTL lines and use to support the company. The suggestion fell on the deaf eyes of the public who see UTL as providing poor services, hence the switch to private ones.
Government took over the full control of UTL in February after the majority shareholder, Libya government-owned UCom unilaterally pulled out of the struggling company.