Debt burdened Vodafone files for bankruptcy

Vodafone Uganda has filed for bankruptcy at the High Court civil division, a move that signals its long struggle to keep up with a highly competitive telecom market.

Vodafone Uganda is owned by Afrimax Group, who entered into a partnered market agreement in 2014, pushing the total number of telecom operators in the country to seven. 

A High Court notice issued on February 19 indicates that Donald Nyakairu has been appointed as the provisional administration of Afrimax Uganda Limited. Nyakairu, according to the order notice, is required to oversee all affairs of the company.

"Take notice that on the February 15, 2018, the High Court of Uganda (Civil Division) issued an order confirming the appointment of Mr Donald Nyakairu as the provisional administrator of Afrimax Uganda Limited," the notice read in part.

It continued: "And an interim protective order was granted to the company for a period of three months pursuant to section 139 of the insolvency Act, 2011."

Vodafone is a service provider of voice and data services, limited to the greater Kampala area. Afrimax Group holds the license that belongs to Vodafone according to UCC.

It emerged recently that Vodafone has been in negotiations with some of its key service providers over failure to settle their outstanding debt.

According to a statement issued by Vodafone in January, Vodafone was forced to issue an apology to its clients over the poor services across its network.

"Vodafone would like to apologise to its customers for the deterioration in the quality of our service. We cannot immediately ascertain how long these challenges will persist, but are working closely with our partners to restore these sites back to full service," the statement read in part. 

That communication followed a December statement that has caught the eyes of the industry regulator to intervene in the matter.

In an interview with New Vision, Uganda Communication Commission corporate affairs director, Fred Otuunu revealed that Vodafone had problems with some of its service providers over failure to settle outstanding debt obligations.

One of the companies Vodafone owes money include Eaton Tower Limited. Eaton is a tower company that provides telecom operators with mobile infrastructural services. The company has had a long standing dispute with Vodafone over unpaid dues according to UCC.

As mechanism to force the troubled company to pay its debt, Eaton moved to shut down some of Vodafone sites in the different parts of the country. 

The shutdown caused a public outcry among the telecom subscribers who demanded for quick answers. According to UCC, negotiations between the Vodafone and Eaton were still ongoing.

Otuunu said: "Vodafone has been having a dispute with the structure service provider, Eaton Towers. This dispute has been commercial. What happened is that Vodafone failed on its part."

On Wednesday, Otuunu said although they had received the application from Vodafone to have an administrator of the company, a plan to bring systems back to normal is still pending.

"Vodafone notified the UCC about their application to court for an administrator to manage their affairs," Otuunu said. "Court granted their application and UCC is satisfied with steps they have taken so far. UCC, however awaits to receive their plans to remedy the situation," he added.

Otuunu said Vodafone did not explain the details of having an administrator take over management of the company.

Fast changing leadership 

In its three year in the market, Vodafone has had at least three managing directors. Allan Richardson, was recalled shortly after assuming office to return to Afrimax Group, saying he was to help prepare ‘next market launches'.

John Ndego was appoint managing director in July 2016 after serving in same position at Airtel Congo Brazzavile and Airtel Burkina Faso. According to reports, Derrick Ssebaale, a Ugandan is currently acting as managing director of the telecom company.

Asked recently whether the changing leadership didn't worry the Commission, Otuunu said: "That is their business". 

Story by Ali Twaha