Uganda plans to convert part of its debt in Uganda Telecom Limited into shares as part of a plan to increase its shareholding in the troubled company.
UTL’s total debt currently stands at Shs523 billion, down from Shs940bn when the company was placed under the receivership of the Uganda Registrations Service Bureau in April.
Ms Evelyn Anite, the state minister for privatisation and investment told this website that the government will increase its shareholding to 59% once it resolves an ongoing dispute with the previous majority shareholder, Ucom, a subsidiary of Libya’s Lap Green Network.
The increase in shareholding will precede bringing onboard a new investor in the telecom, Ms Anite said.
Previously Lap Green, a Libyan government firm, had a 69% majority stake in UTL while the Uganda government controlled the rest of the shares.
“This being a government venture for profit, it came to our notice that if we are to have any say again then we need to be the majority shareholder,” Ms Anite said.
UTL, Uganda’s oldest telecom, has been in a state of free-fall since 2007, with its market share dropping from about 30% to below 6% in 2017. This was coupled with heavy indebtedness, losses, and financial misappropriation.
The biggest setback to the company’s fortunes came in 2011 with the fall of the Muammar Gaddafi regime in Libya. This was followed by UN and European Union sanctions on businesses and companies owned by the Libyan government, including Lap Green Network.
Consequently, the Uganda government ejected Ucom from the telecom in April, saying it wanted to inject capital into the collapsing company.
An Asian-owned private company, Cameo Techedge Limited, had petitioned court to instead close UTL over a $133, 000 liability but government foiled the attempt by obtaining a bankruptcy order.
“We have received a couple of prospective investors, but we have an ongoing court case which we must first dispose of,” Ms Anite said on Thursday. She did not disclose the prospective investors.
The telecom’s provisional administrator Bemanya Twebaze, who also heads the Uganda Registrations Services Bureau, said that UTL owes Shs940bn to different creditors, in addition to huge operational costs, including a Shs2bn wage bill.
“When we went in we invited all claims from creditors but after verification it was noted that the genuine ones only amounted to Shs523bn,” Mr Twebaze said.
Of the Shs523bn, Mr Twebaze said Shs202bn is a direct responsibility of the central government, while Shs330bn is owed to the entities like Uganda Revenue Authority, Posta-Uganda and the National Social Security Fund.