Kampala- Government will have to outsource an alternative investor to take over the operations of the Uganda Telecom Limited (UTL) after the six companies that had expressed interest were found financially incompetent.
In a leaked report, the Financial Intelligence Authority (FIA), which was tasked by the President to investigate the seven shortlisted companies out of the 17 that had initially expressed interest, found that they did not have the required financial muscle to run UTL.
The companies that were subjected to FIA investigations after being shortlisted are Hamiliton Telecom Limited, Teleology Holding Limited, Mauritius Telecom, Telecel Global, Neubacher Montage LLP, Bayliss Consortium, and Afrinet Kenya Limited. This newspaper understands that the process of picking a new investor for UTL delayed because the government has been waiting for the FIA report.
Early this year, Cabinet ordered that an investor to run UTL be sought after finding out that it was choking on debts worth over Shs200b. At the time, President Museveni ordered all government ministries, departments and agencies to buy internet from UTL.
To avoid handing over UTL to ghost companies, the President also ordered that all shortlisted potential investors be subjected to rigorous investigations by FIA.
Mr Sydney Asubo the FIA executive director, said in his May 23 letter to the President that they had analysed the companies and carried out due diligence on their financial records.
“This company analysis and financial due diligence report is based on information obtained by the FIA from other financial intelligence units, companies’ financial statements/banking information (where they are available) and information obtained from open sources, among others,” Mr Asubo’s report reads in part.
Unlike the six companies that have been ejected on account of lack of records about their audited finances, the FIA report cleared Mauritius Telecom, a company in which the government of Mauritius holds 30 per cent shares. However, the government has asked Mauritius Telecom to either increase the money for investment or forget the UTL deal.
According to the leaked report, Mauritius Telecom’s total assets are worth Rs15.6b (about Shs1.7 trillion) which the government insists shows that the company running telecom services in many countries may not ably run UTL.
The President has also ordered for an open sourcing of capable companies from the region but without “closing the door” on Mauritius telecom as long as its financial stake is increased.
According to the FIA report, Mauritius Telecom is a well-established company and its managerial team has a wealth of international experience in the telecom industry.
FIA in their report said investigations revealed that Teleology Holdings Limited is a private equity firm incorporated in Gibraltar with 12 international and eight Nigerian shareholders.
But what disqualified the company is the fact that it is in the process of acquiring 9mobile, one of the major telecommunications companies in Nigeria, which is struggling to repay a loan of $1.2b (Shs4.6 trillion) that it obtained from 13 different banks.
The other is Hamilton Telecom Limited, a company incorporated in Uganda on August 23, 2016, with objectives of providing communication services, satellite services and cellular internet, among others. FIA said in the report that they have not been able to obtain Hamilton Telecom Ltd’s audited financial statements and neither those of Mr John Mukalazi Kamya who is presumed to be its single beneficial owner.
For Telecel Global, a company incorporated in Lebanon but with other offices in South Africa, United Kingdom and the Dominican Republic, the FIA reported that it had not seen financial records to facilitate assessment of its financial strength much as there were no reports of involvement in money laundering and terrorism.
Afrinet Kenya Limited, Bayliss Consortium, and Neubacher Montage LLP were also knocked down on the same reason of FIA failing to access information on their operations including audited financial statements.
Sources have told Daily Monitor that the President is personally supervising the process of sourcing for UTL investors and has directed FIA to investigate and compile a report on such companies “without adding or subtracting” any information discovered.
Licence. Cabinet early in April provided incentives to whoever will land the UTL deal. Information minister Frank Tumwebaze said Cabinet extended UTL’s operational license for 20 more years.
Coverage. Cabinet also directed the Uganda Communications Commission to expand the UTL spectrum to cover the whole country and also allow it limited access and use of the National Backbone Infrastructure.