Vodafone Uganda is no more after the Vodafone Group terminated its partner market agreement with the Afrimax Group. The two signed the contract in 2014 to offer voice and data products and services using the ‘Vodafone Uganda’ brand.
A report in the New Vision says Vodafone walked back the arrangement in January after it became clear that the heavily indebted Afrimax Uganda was going under. An audit by the provisional administrator appointed by the court last month found that it had accumulated debts worth Shs298.9bn against an asset base of only Shs55bn as of 15 February.
The company’s biggest debtors are Nedbank, the South African bank, whose debt is secured, the National Social Security Fund, and the Uganda Revenue Authority.
Afrimax Uganda’s troubles escalated last year when revenue fell due to inadequate investment by its shareholders, lack of funding from banks, and switching off 80% of its sites because it was not paying rental fees. It did not help that promotions by the bigger telecoms ate into its small client base.
Its hope is that the current shareholders are bought out by a flush entity. Vodafone has also expressed willingness to sign a new partnership agreement with new shareholders. Should this fail to happen, it will be liquidated.
Meanwhile, a tweet by Vodafone Uganda’s account said its network – which was switched off when the company started bankruptcy proceedings – has been stored in various locations. Its management has considered cutting employee numbers to 50 from 150 and closing some retail shops as a way of reducing costs.
The company spent Shs2.6bn in monthly operational costs – with a payroll of 150 people, according to the report.