Fighting for a dead man: 90% of UTL assets were mortgaged to PTA bank

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By Moses Kaketo
In reference to the story in one of the local newspapers; Anite, Muhakanizi fight over UTL; Veteran Journalist Joachim Buwembo posted ‘‘Africans tend to fight for dead bodies’’
Is Uganda Telecom Limited (UTL) dead? Is this the reason why investors are running away?

With almost nothing left in its core assets [by the time, UTL sank into administration two years ago, her liabilities had shot to 500 billion and asset base of 80 billion.] Not even government offer to waive all the liabilities has attracted serious buyers. So what is the issue?
The UTL is currently ranked very low in the telecoms market; with just about 3% of the estimated 20+ million subscribers in Uganda. It runs on an outdated 2G technology while competitors (MTN, Airtel and Africell) are on 3G and 4G. Her main office/ and other buildings are derelict.

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Dependable sources say, all potential investors run away after looking deeper into UTL’s books of accounts. What is in these books of accounts? Read on.
Early this year, a Nigerian firm that won the bid in October 2018 also pulled out.
October last year, government handled over UTL to Nigerian firm, Teleology Holdings GIB Ltd, after six months of scrutinizing several bidders. The investor, who had offered to pay $60 million (about Ugx. 225 billion), jumped out of the deal just after two months.

The latest investors to take-off include Kenya’s Safaricom and Agha khan
April this year, Aga Khan had expressed interest in taking over the former telecom giant. However, results from the due diligence were not impressive, sources at UTL told Newz Post. He pulled out.
Then came Kenya telecom giant- Safaricom. Highly placed sources told Newz Post, the talks between Uganda government and Safaricom top owners [brokered by a top Kenyan politician] were in high jeer. The politician was facing rough time back home. That’s how the Safaricom-UTL hit a dead end.

According to telecom analysts, Safaricom takeover would have been the best deal- it would shake up the industry. They have the money, the experience and the technology. Safaricom are giants in Kenya. And through Vadacom market leaders in Tanzania. They are also present in Rwanda.

Why potential investors running away

Insiders say, investors say UTL is overestimated.
According to reliable sources, UTL almost has nothing left of its core assts. Sources say, majority of the assets of the bedridden company are non-core- [Buildings, land, equipment]. They are not related to the telecom business.
The Core business of Telecom Company comprise of: License, Network, Towers and the Spectrum.
The UTL assets [land, buildings, machinery, and spectrum] estimated at about $ 80m (About Ugx. 300bn). Government is currently selling the UTL at $ 70m.

But that is not all.

Highly placed sources at UTL told Newz Post that majority of UTL assets (90%) were mortgaged to PTA bank. the bank reportedly demands over $17m from the struggling telecom firm. when you take off this figure, UTL’s actual assets drops to $70. Never mind that some assets like buildings are dilapidated and thus could be overvalued.

Not yet Uhuru
When government finally get a serious and not ‘‘quack investor’’ as Anite prefers to call them, to buy UTL. There is another big hurdle in the waiting room.
‘‘The Libyans [Libyan Post Telecommunications & Information Technology Company (LPTIC)] still legally own 69 percent shares in UTL. They are waiting for any move and they will come in ‘’ a source close to lawyers who represent the Libyans in Kampala said when asked for a comment.

LIPTIC on Feb.24 2017 informed government of Uganda that they had lost confidence in government’s ability to conclude an agreement with them. They said they would not release any more funds to UTL and asked all their representatives to resign from the company. However, there is no legal document to prove they are no longer shareholders in UTL. Government of Uganda owns 31 percent.

New Investors emerge
A few weeks ago, a new investor, Etisalat, a Dubai based telecom company expressed interest in UTL. However, their demands are tough.
Etisalat Group is one of the world’s leading telecom groups in emerging markets, with a current market cap of USD 40.3 billion. Headquartered in Abu Dhabi, Etisalat was established over four decades ago in the UAE as the country’s first telecommunications service provider.

An international blue-chip organisation, Etisalat provides innovative solutions and services to 143 million customers in 15 countries across the Middle East, Asia and Africa.
Etisalat was founded in 1976 as a joint-stock company between International Aeradio Limited, a British Company, and local partners.
Etisalat Group has captured significant market share as it expands across Africa, Asia and the Middle East, most notably in Egypt and Saudi Arabia, where the introduction of innovative mobile broadband services has changed market dynamics and provided affordable mobile internet access.

However, sources close to those brokering for this firm revealed that this company is only interested in UTL’s core assets. Government is therefore free to sell UTL non-core assets, and settle the company’s debts.
Way forward
To solve the current hurdles, analysts say, government may have to create another UTL company, say UTL 2000, and transfer all debt obligations to the old UTL. That way, the Libyans will be locked out. But also, it will get serious investors.

Another Mauritius company whose details are still scanty is said to be interested in UTL.

Is UTL worth buying?

Telecom is about, Brand, customers and network. UTL almost has nothing, the brand is almost gone, customer base is at its lowest, and the network is almost in nonexistence.
However, Telecom analysts believe UTL has a prized asset “UTL is quite strategic. It appeals to any serious investor’’

UTL is the only telecom in Uganda that owns an undersea cable—it owns 9% of the submarine cable company, West Indian Ocean Cable Company.
The government has also created incentives to make the company more attractive. They include managing the backbone among others

read: Airtel to exit Ugandan market

Another attractive offer is that UTL will continue running government business, providing communication services including mobile network and internet to government agencies and departments.

More about the author: Moses Kaketo

read: Why Airtel Uganda MD, Anwar Soussa was sacked after one year in office

read: Tracing the origin of Airtel woes in Africa

Like us on face book: Newz Post twitter: @newzug

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