Mergers, Acquisitions and Financial Results

A Libyan company, Libya African Portfolio (LAP) Greencom has finally taken over Ugandan Telecom Limited, (UTL), after acquiring Ucom, the majority shareholder in Uganda's largest fixed line telephone operator.

In a new shareholding structure, the Libyans now own 69 per cent of the equity while the government of Uganda retains the remaining 31 per cent. According to a statement from UTL last week, Libya African Portfolio (LAP) also immediately appointed a new MD Abdulbaset Elazzabi, a Libyan replacing acting MD Donald Nyakairu. He started work on Tuesday. It is unclear what experience of competitive telecoms markets Elazzabi brings to the company.

UTL's Marketing and Communications Officer Mark Kaheru said they did not expect further management changes. "We haven't been told about any changes so there won't be any," he said. Kaheru said the; "The government offered shares to Ucom at a premium rate," but he refused to disclose the actual price paid.

Daily Monitor reported on March 30 that the government had ceded 18 per cent of its shares to Ucom after failing to raise $12 million that was required to finance the company's expansionist investments and guard its market share.

When UTL was formed in 2000, the government owned 49 per cent while Ucom had 51 per cent. After the government failed to raise the money, it agreed with Ucom that the latter raise the money which would then be converted into more shares for it.

It remains unclear whether the Libyan interests in the company had any bearing on the government's curious failure to find the $12 million and secure the public's stake in the company.

The Libyans are expected to embark on a sweeping re-organisation of the company to pull it into a more robust position and particularly offer it technological and financial muscle to start challenging its top rivals MTN and Celtel, other two telecommunication service providers.

Uganda's telecommunications market has increased notably after the rescinding of the dominance of MTN, UTL and Celtel. The country has a total of 2.5 mobile subscribers of which MTN controls almost three quarters.

Last month, the Uganda Communications Commission,(UCC), licensed the fourth and fifth national telecom operators, Hits Telecom and Al-Warid Telecom, both from the Middle East.

Industry analysts say the new entrants are spending more than $300 million and that this would unleash tremendous pressure on the existing operators who will have to invest in new, costly technology to offer competitively superior products and services if they are to keep their customers.

LAP thus, according to sources, was brought in to offer its hefty chest of resources to UTL so it can effectively respond to an increasingly tight market. LAP's entry into UTL is also an entrenchment of its already deep roots in Uganda.

Early this year it bought 60 per cent shares in the troubled textiles company Tri Star Apparels. It has said it will recapitalise the company with $40 million so manufacturing of garments for the US's Agoa market can resume.

LAP's UTL deal also reflects the spreading Libyan presence in Uganda. Last year a Libyan company, Tamoil won a tender to construct a petroleum pipeline from Western Kenya to Jinja in Uganda.

The Monitor