MTN Uganda — the country’s largest company by revenue — and the government have reached a deal on the renewal of the telecoms firms’ operating licence, according to a report.
The Daily Monitor said that MTN has agreed to pay $100m, or Shs371.5bn, for a 10-year operating licence. The deal was confirmed by Keith Muhakanizi, the secretary to the treasury, and the telecommunications regulator, the Uganda Communications Commission.
“Government negotiated $100m and they are going to pay,” Mr Muhakanizi told the Monitor. “They have agreed.”
The figure is what the government had initially decided to charge MTN Uganda to renew its licence after it expired in October 2018, before the UCC revised it lower to $58m. This was after MTN said it would have to invest close to $200m to meet the obligations of the national broadband policy.
However, President Yoweri Museveni opposed UCC’s decision on the grounds that MTN Uganda has reaped “vast profits” in Uganda since 1998, when it started operating, “most of which have obviously been repatriated.”
“The company’s obligation to sow where it intends to reap for the next 10 years, as well as its ability to do so are and cannot be in doubt,” Mr Museveni said.
MTN Uganda is a subsidiary of the Johannesburg-listed MTN Group, which has a 96% shareholding in the company. Invesco Uganda Ltd, a company owned by businessperson Charles Mbire owns the other 4% of shares.
Another obligation in the new broadband policy, and a requirement for licensing, is the listing of telecom operators on the local stock exchange to limit profit repatriation and improve transparency in the reporting of the telecoms’ profitability, among other justifications.
In its 2018 results conference call with investors, the MTN Group chief executive, Rob Shuter, said there were plans to list MTN Uganda locally. Media reports later said the government had insisted, as a condition for the renewal of its operating licence, that MTN Uganda list at least 20% of its shares on the Uganda Securities Exchange.
The listing of foreign-owned telecoms is expected to be done within two years after receiving a new operating licence.
According to results released on Wednesday, MTN Uganda generated Shs514.6bn (R1.9bn) in operating profit in 2019, a 56.3% increase from the previous year.
The company said its revenues rose 23.5% from a year ago to Shs1.7 trillion (R6.7bn), up from the 4.4% growth registered in 2018, driven by increases in outgoing voice revenue, data revenue, and fintech revenue.
MTN might be Uganda’s biggest company by revenue, but it accounts for a tiny slice — 4.4% — of the MTN Group’s R151.4bn in annual revenue. Between them, Nigeria and South Africa contributed 60.8% to group revenue in 2019. Still, MTN Uganda is the group’s biggest subsidiary outside West Africa and South Africa.
MTN Uganda’s market share was 54.7% at the close of 2019 in a market of eight operators, according to its financial results. Its subscribers increased by 12.2% year on year to 12.6m.