Rwandatel Hit With Rwf54.3 Billion Liabilities

Mergers, Acquisitions and Financial Results

Rwandatel is willing to pay the Rwf54.3 billion it owes to its creditors arising from debts and other expanses, the company's new administrator said yesterday.

The financially crippled telecom operator is tussling with the Registrar General, who is seeking a court order to disolve it because of technical insolvency. According to Rwandatel's Chief Finance Officer (CFO), David Gaitho, the company's total liabilities as at December 31, 2010 amounted to Rwf54.3 billion with Rwf1.7 billion as debt it owes to MTN Rwanda and TIGO Rwanda in interconnectivity fees.

The biggest fraction of Rwf10 billion and Rwf10.1 billion is owed to local suppliers and in foreign trade. Rwandatel's debt to government amounts to Rwf3.6 billion while taxes, fines and penalties totalled to 485 million.

Unsold airtime and other accessories amounted to Rwf63 million, salaries and employment costs Rwf413.6 million and other payables like transport add up to Rwf 649 million.

Gaitho added that the company's short-term borrowing from banks and other sources rose to Rwf21.8 billions as receipts collected from clients and not allocated to their accounts totalled Rwf5.2 billion.

The uncountable debt, he said amounted to Rwf4.9 billion with payables to related parties totalling Rwf3.6 billion. While briefing the press last week, Richard Mugisha, Rwandatel's administrator, who was recently appointed by court, said that the company has the capacity to pay off all the liabilities since it is still up and running. "The company still has fixed telephony license which has always accounted for 60 percent of its revenues," he said.

Mugisha said that court appointed him interim administrator because the company has been experiencing issues of mismanagement. He is supposed to advise court on whether the company can be turned around or be liquidated.

The administrator underscored that his job is to maintain the remaining services which are vital to the country's economy, reduce company operating costs and collect money owed to the company as well as pay off the creditors.

"The public and in particular Rwandatel's existing clients should, therefore make every effort to honour their obligations to Rwandatel and clear their outstanding bills with the confidence that their existing services shall not be halted," Mugisha said.