Uganda: Airtel, MTN Sue UTL Over Debts

Mergers, Acquisitions and Financial Results

The Commercial Court has become the latest battleground for telecommunication firms a few months after the industry witnessed major price wars in the race for customers. Daily Monitor has established that Airtel and MTN Uganda have dragged Uganda Telecom Limited to court after it failed to pay about Shs18 billion in interconnection fees. Utl has accumulated the bill over the last two years, after it allegedly failed to pay its rivals for enabling its subscribers to make calls to and from other networks.

Airtel (formerly Zain) and Utl agreed to pay between Shs95 and Shs151 per call to each other's network according to the interconnection agreement signed in 2000. Utl's failure to settle the bills could make it impossible for its subscribers to either call or receive calls from subscribers on Airtel and MTN.

In a suit filed at the Commercial Court on December 16, 2010, Airtel demands Shs3.76 billion of Shs5 billion in interconnection fees from Uganda Telecom. This is in addition to interest rate of 11 per cent per annum of the amount due, and costs of the suit. Airtel is also demanding from Utl Shs1.3 billion and Shs45.5 million, in two separate cases involving the use of its equipment.

The money was accumulated between 2008 and last year according to the claim in court. "The defendant (Utl) has neglected, failed or otherwise refused to pay balance... as a result of which the plaintiff has suffered great loss and damages," reads a suit filed by Lex Uganda Advocates on behalf of Airtel Uganda. "The Plaintiff (Airtel) avers that the defendant's non-payment of the balance above amounts to breach of the Interconnection Agreement, and the Settlement Agreement," the lawyers add.

Daily Monitor has also established that MTN is demanding over Shs14.7 billion in interconnection fees accumulated between September 2008 and November 2009. A suit filed by MTN's lawyers on its behalf indicates that Utl has only paid about Shs3.5 billion of the total claim and has refused to pay Shs3.45 billion arguing that it was not a result of the domestic traffic which attracts interconnection fees but was international traffic with Sudan. Utl said the calls were terminated to the network in South Sudan. But the two are sister companies with Utl owning majority shares.

MTN has threatened to stop interconnection calls to Utl if the latter does not pay up by Friday. But Airtel which has just taken its case against Utl to the Commercial Court, also said ending calls between the two networks could be considered.

"The worst case scenario is for us to end interconnection with them. But of course that would be a disservice to the customers. However, it's up to the court to determine the repercussions," Mr Joseph Kanyamunyu the public relations manager at Airtel said in an interview with Daily Monitor on Tuesday. By yesterday, Utl had neither paid MTN nor Airtel the money due.