Libya tasks gov't to repay UTL investment

PIC: Finance minister Matia Kasaija said government took over UTL to protect Uganda's interests and save hundreds of jobs. (Photo/File)

The Libyan Post, Telecommunication and Information Technology Holding Company (LPTIC), which owns LAP Green and UCOM; hitherto the majority shareholders in Uganda Telecom Limited (UTL), have written to government urging it to respect its interests as an investor and as a creditor.

The Government of Uganda which previously held a 31% stake in Uganda, recently took full control of the indebted company as it looks buyers for what used to be Ucoms 69% stake in a bid to revive the company's fortunes.

The Libyan company is not going away quietly and said in a statement: "Moving forward and notwithstanding the decision to discontinue funding UTL, the majority Shareholder expects the Government of Uganda to fully comply with applicable laws and best practice concerning the protection of its investment interests in UTL…

"…including with respect to its rights as UTL's largest creditor. As a Majority Shareholder, the Libyan Post, Telecommunications & IT Holding Company (LPTIC) will contest any plans or efforts to undermine its position," a statement circulated by LPTIC officer Heba Alshibani said.

The Libyan company claimed that its decision to cease funding UTL was not made lightly and that 14 months of intense talks hit a deadend due to a protracted lack of substantive engagement from senior stakeholders within the Ugandan government.

LPTIC also alleges that its decision to cease further funding of UTL was influenced by what it called "institutional unwillingness of the Government of Uganda to commit to a transformation plan for UTL in addition to its lack of contributions".

The Libyan company now claims that it spent substantial amounts of money to fund UTL's working capital requirements on a month-by-month basis.

LPTIC said : "This was done to ensure that employee salaries and essential creditors could be paid and the business continue to operate in spite of making no sufficient operating profits partly due to the substantial amount of unpaid debt owed by the Government of Uganda for services provided to support the country's services and infrastructure."

A select parliament committee instituted to investigate the financial woes at UTL estimated that the company is in the red to a tune of sh700b, of which the bulk is due to UCOM. Other major Creditors include the regulator Uganda Communications Commission (UCC), the Uganda Revenue Authority (URA), MTN Uganda, and Huawei Technologies among others.

UCOMs stake in Uganda Telecom was estimated to be worth $270m (about sh972b) with the company employing over 500 Ugandans directly.

Many observers are skeptical about governments' ability to secure a new investor to acquire the company, clear its debts and invest in new infrastructure in the near future.

UTL has been limping since 2007 when its performance was characterized by heavy indebtedness, decline in market share and losses due to inadequate investment, competitive pressures, a dilapidated network and governance challenges, finance minister Matia Kasaija recently explained.