Ministry of Finance has presented to Cabinet two bidders from which one must be selected to invest in the liquidated Uganda Telecom (UTL), but it has turned out that the Minister Kasaija favours Mauritius Telecom over Hamilton Telecom which has been complaining of alleged unfairness in the bidding process.
The government of Uganda and UCom hold 31 per cent and 69 per cent shares respectively in UTL, which is currently administered by Twebaze Bemanya, Uganda’s Registrar General and Chief Executive Officer of the Uganda Registration Services Bureau (URSB).
A document to Cabinet has urged Bemanya to finalise the contract with Mauritius Telecom, seen to be the only credible potential partner with Government as recommended by the Financial Intelligence Authority (FIA) Executive Director Sydney Asubo.
President Museveni directed the FIA to carry out due diligence on the number of potential investors and the agency in its report, cleared Mauritius Telecom as the most credible and financially stable company to co-invest with government in UTL, much as it did not give the highest offer.
State Minister for Investment Evelyn Anite now on a study leave in the US had also held that Mauritius Telecom was the best bidder following the clearance by the FIA which analyzed the operational and financial records of all bidders.
But that decision did not go well with Hamilton Telecom and Bemanya as they accused the FIA of incompetence, bringing about the current scandal in UTL that brought about sharp differences between Bemanya and Minister Anite as the former fought to have Hamilton Telecom ahead of Mauritius Telecom.
the FIA had cautioned Cabinet against dealing with Hamilton Telecom, reporting that the company employs only 20 people and indicated an expected monthly turnover of Shs200 million, which was worsened by the fact that the company’s funds were originating from a one John Kamya but also that the company’ financial statement as well as that of Kamya were absent at the time of scrutiny.
Hamilton Telecom Limited, was incorporated in Uganda on August, 2016, with objectives of providing communication services, satellite services and cellular internet, among others
“It is therefore our opinion that it is risky for government to engage this company as a strategic investor,” read part of the FIA report, adding that the company lacks the financial capacity to be a meaningful strategic partner to government of Uganda.
However, in case Mauritius Telecom opts out, the ministry said it would consider Hamilton Telecom on grounds that it acquires UTL in a short period of time.
The company would have to make a non-refundable deposit of 10 percent of the offer within seven days of the date of the offer and a requirement to sign the agreement and to pay the balance of the proposed amount within further seven days. The company had made an offer of US $70 million (about Shs25.9 billion) in assets with capital investment of US$285 million (about Shs1.055 trillion) in three years.
Mauritius Telecom’s asset consideration is US$45 million (about Shs166.5 billion) and plans to invest $100 million (about Shs370 billion) in three years.
As it sources for the new investor, government plans to extend UTL’s license for 20 years, expand its frequency bandwidth to cover the whole country and give tax waivers on import duty for equipment, Corporate Tax, VAT and Excise duty on services for the initial of four years.
Government also wants UTL to become the sole provider of ICT services to Government and have access and use of the National Backbone Infrastructure.
That would be boosted by a starting customer base of 400,000 government employees who have been directed to install UTL lines.
Kenya’s giant telecom-Safaricom, which had shown interest in partnering with Afrinet Communications Limited, withdrew its interest.
As a result Afrinet Communications Ltd which had offered the second best purchase price of US$ $67 million (about 247.9 billion) has confirmed their withdraw, leaving Mauritius Telecom and Mauritius Telecom in the battle to the up the majority stake in UTL.
Government needs an investor who pays off UTL’s creditors. But no investor has offered US $80 (about Shs296 billion) required to take over majority shares.
Bemanya meanwhile proposes that government selects the best three potential partners and entice them to increase their offers. However given FIA’s recommendation that Hamilton Telecom is not financial vibrant, it would be difficult for the company to raise the offer and be accepted.
But the ministry stresses that for any agreement concluded in view of government incentives, the Attorney General approve it; and the Administrator must obtain proof of availability of funds from a reputable bank before making an offer to any partner.
Telecel Global, a company incorporated in Lebanon but with other offices in South Africa, United Kingdom and the Dominican Republic, the FIA reported that it had not seen financial records to facilitate assessment of its financial strength much as there were no reports of involvement in money laundering and terrorism.
Afrinet Kenya Limited, Bayliss Consortium, and Neubacher Montage LLP were also bypassed by the FIA after failing to access information on their operations including audited financial statements.
FIA’s investigations revealed that Teleology Holdings Limited is a private equity firm incorporated in Gibraltar with 12 international and eight Nigerian shareholders.
But the the company was disqualified because it was in the process of acquiring 9mobile, one of the major telecommunications companies in Nigeria, which is also has to repay a loan of US $1.2 billion that it obtained from 13 different banks.