Kampala- The Cabinet has handed Uganda Telecoms Ltd (UTL) to a Nigerian firm, Taleology Holdings GIB Ltd, ending a year of controversy and rancorous competition by seven bidders to snap up the state-owned enterprise.
As with the bid rivalry, the decision for Taleology to take over and revamp the struggling telecom polarised ministers, four of them who attended the decisive October 1, 2018 meeting separately told this newspaper on condition of anonymity because Cabinet decisions are confidential.
The decision followed a September 24, 2018 presentation to Cabinet of a financial capability report by an ad hoc committee after State Investment minister Evelyn Anite, the overseer of the UTL sale, claimed that Taleology had no technical expertise or financial muscle to run telecom business.
Her choice, the State-founded Mauritius Telecom, was ranked second best in a pack of competitors some of which, such as Safaricom Kenya’s subsidiary Afrinet and adversely named Hamilton, dropped out prematurely.
Mauritius Telecom has 1.3 million subscribers, according to information on its website, and 40 per cent of its shares are owned by Orange that sold its Uganda majority stake to Africell Holding in 2014 after doing business here for only five years.
Highly-placed sources said Taleology staked $71m (Shs268b) against Mauritius Telecom’s $45m (Shs167b).
Gen Moses Ali, the First Deputy Prime Minister, reportedly told ministers during the October 1 meeting that a Cabinet sub-committee he chaired endorsed the Nigerian firm for the deal because dropping without justification, while the highest bidder, would predispose Uganda to probable costly litigation.
Ms Anite reportedly disagreed, digging in for Mauritius. The disagreement, one minister said, prompted President Museveni to side with the offer going to Taleology.
Our investigations show that one of the notable lobbyists for the Nigerian firm was Elizabeth Macheka, the widow of former Zimbabwean opposition leader Morgan Tsvangirai, who flew into the country and made a case that convinced the Cabinet sub-committee that Taleology outstripped its competitors.
She has favour among Uganda’s highest political circles for securing for Uganda a line of HIV/Aids drugs, a source knowledgeable about her connections with the country said.
Following the meeting that another source described as unusually heated, Cabinet agreed to give UTL to the Nigerian firm that in February this year, snapped up Etisalt (9mobile) in the West African country at $500m (Shs1.8 trillion).
It ordered Taleology to make a non-refundable 10 per cent payment, in this case $7m (Shs26b) within a month from date of offer and pay up the balance two months later.
Failure to fulfill the financial obligation would prompt the government to cancel the offer and scout another buyer for UTL, which plunged into the red due to mismanagement, high debt portfolio and dwindling subscriber base. Under the deal, Taleology would own 67 per cent shares while the government remains a minority shareholder.
In return, the Nigerian company will take over UTL’s Shs148b assets, tax waivers, an extended frequency as well as Uganda’s flagship multi-million dollar national backbone optic fibre infrastructure and manage it for 20 years.
Information minister Frank Tumwebaze yesterday said he did not attend the Cabinet meeting that sealed the UTL deal, and referred further inquiries to Ms Anite, who was not immediately available.
Insiders said Mauritius was considered unattractive for security and sentimental reasons.
Proponents argued that giving a key State communication asset to a foreign government, over which Uganda was unlikely to exercise control, was risky and that it would erode Uganda’s esteem.
UTL in which the Libyans through UCOM Ltd owed majority stake went under after the big shareholders quit in February, last year.
To prevent its liquidation, the government scrambled and placed the telecom under the administration of Registrar General Bemanya Twebaze, who was tasked to stabilise and scout potential investors to salvage it from the doldrums triggered by more than Shs500b debt and management rot.
Our investigations show that the kingpins in Taleology have vast experience in telecommunications business, including in the Ugandan market.
Some of its notable officials include Mr Noel Meier, the founding chief executive of MTN Uganda and MTN Rwanda; Mr Adrian Wood, founder and chairman of Teleology and pioneer chief executive of MTN Nigeria and Dirk Smets, the chief executive who started MTN Cameroon.
February 2017: Libyan investors UCOM Ltd withdraw and five directors resign from UTL.
April 2017: Government places the telecom under administration of the Registrar General.
October 2017: The administer solicits bids from potential buyers.
January 2018: Government calls for expression of interest for acquisition of UTL.
April 2018: Expected announcement of winner fails, instead Hamilton Telecommunications Afrinet introduced as additional bidders.
June 2018: Search for buyer runs into wall after Ms Anite accused the administrator during a Cabinet meeting of offering her inducements on behalf of one of the competitors. Cabinet sub-committee constituted to probe allegations. Financial Intelligence Agency investigates seven evaluated bidders after Afrinet withdrew, ranking Taleology the best. Ms Anite reportedly rejects the report, saying firm has no technical expertise and is not liquid. Prime Minister tasked to inquire into the new concerns.
September 2018: Financial capability report tabled to Cabinet concludes Taleology has cash.
October 2018: Cabinet chaired by President Museveni gives UTL to the Nigerian firm.