The Libyan Post, Telecommunications, and Information Technology Company (LPTIC) has blamed the Uganda government for failure to adopt the planned strategy that would have turned around Uganda Telecom.
Last week on Wednesday, Mr. Matia Kasaija announced that the government had taken operations and management of UTL, after the majority shareholder, LPTIC confirmed to the government that it was no longer going to fund the operations of the telecom confirmed. On Sunday, the LPTIC finally spoke out for the first time since the government takeover and questioned the Uganda government commitment to turnaround UTL.
“Despite every effort by the Majority Shareholder to save UTL, and in addition to its readiness to fund the implementation of a Transformation Business Plan, it was not possible to conclude negotiations with the Government of Uganda. In straightforward terms, the process could not continue in the face of a protracted lack of substantive engagement with senior stakeholders within the Government of Uganda,” reads a press statement issued by LPTIC on Sunday evening.
LIPTIC through UCOM owned a 69 percent stake in UTL, with the government owning another 31 percent.
Since 2006, UCOM has been responsible for key decisions in the company but has also been committing cash to UTL. LPTIC noted with concern that it was no longer willing to use money from of the Libyan people to finance an entity where the other shareholder was non-committal.
“Therefore, given the institutional unwillingness of the Government of Uganda to commit to a transformation plan for UTL in addition to its lack of contributions, the Majority Shareholder, as a responsible investor ultimately accountable to its Libyan Government stakeholders, had no choice but to cease further funding of UTL,” the statement goes on to read.
The decision to halt any funding to LPTIC was made on 24th February 2017. This decision caught the government off-guard but allowed them time to opt to take over and start a nationalization plan of the assets of UTL. The two shareholders have been negotiating the turnaround strategy for UTL for the last 14 months.
UTL was in such a sorry state that had reached a point where it could no longer even have working capital to run day-to-day operations. LPTIC says it did this on a monthly basis. It also blamed the government for failing to honor its debt obligations estimated to be about Shs16bn from the provision of services like data and fixed lines.
UTL is in dire need of a capital injection of about Shs100bn in the short term if it is to be able to generate returns. Kasaija last week when announcing the closure said “UTL’s performance since 2007 has been characterized by heavy indebtedness, the decline in market share and losses” and that this “…was due to inadequate investment, competitive pressure, a dilapidated network and governance challenges.”
LPTIC is also the largest creditor of UTL because it extended shareholder loans that have accumulated to almost Shs170bn. LPTIC says it wants to recover the money once the government completes nationalization or brings in a new investor.
“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 will contest any plans or efforts to undermine its position,” the statement further reads.