MTN Uganda ends three-year license tussle with government

20 March 2020

Telecoms

Telecommunications giant MTN has said it will list 20 percent of its shares on the Uganda Securities Exchange, and pay $100 million in blanket taxes as part of the conditions for it to be issued with a long-term license in the East African nation. This comes after a three-year-long tussle between Africa’s biggest network operator and the Ugandan government.

The tax fee will be paid in two instalments of $50 million each to the Uganda Revenue Authority. The first payment was expected to come in yesterday, while the next will be received in April or before the end of the financial year, reports say.

Uganda’s State Minister for ICT Peter Ogwang confirmed the reports on Friday while providing the basis for the issuance of an unusually long-term license. “It is true that MTN agreed to pay the $100 million in return for a license for 14 years. As a government, we had wanted to give them 10 years but they explained that they have to invest in infrastructure upgrades and that their investment plan will see them injecting an extra $260 million over the period so we agreed on 14 years,” he said.

“They also agreed to start the process of public listing which requires them to list at least 20 percent of the company shares within the first two years of licensing,” a source told The EastAfrican.

The newly-acquired National Telecom License will take effect from June 30, after which MTN will then have full geographical access coverage of Uganda. The company will also be able to improve the quality of telecommunication services and boost investment in the sector for both existing and new telecom operators.

Over the years, there have been constant clashes between the Ugandan government and MTN, which was accused of under-declaring its revenue and cheating the state on tax collections. There were also allegations that the telecom company hired spies of the Rwandan government, undermining Uganda’s national security. This triggered the deportation of four top executives at MTN Uganda, including a Rwandan national last year.

According to a government spokesman, Ofwono Opondo, authorities are not after disintegrating MTN’s business but seek to fetch out the bad elements who are using the company’s system to compromise the economy and security of the country. “The dispute between MTN and the government, in particular, is that MTN is making transactions and declaring far less in both the volume and the income and consequently it is cheating the government in tax revenue,” he said.

To address such issues, the Ugandan government introduced a new comprehensive policy guiding broadband licensing. Network operators are now issued permits under specific categories which include National Public Service Provider, Regional Public Service Provider, National Public Infrastructure Provider and Regional Public Infrastructure Provider. The law also enables telecommunication companies to follow due procedures and select a preferred category to run their operations smoothly and effectively without having problems with the government.

Source: Ventrues Africa