Uganda’s Plans for State-Owned Service Provider U-Tel are Announced

The announcement late last week that a UAE-based investor Rowad Capital Commercial (RCC) is to acquire a 60% stake in Uganda’s national telecom company, Uganda Telecommunications Corporation (UTel), begs a number of questions that are yet to be answered.

The basic idea seems to be to capitalise UTel to take on the management and commercialisation of the ICT National Backbone Infrastructure (NBI) in Uganda.

Rowad Capital will take a 60% shareholding in UTel, while government will maintain a 40% share; the Ministry of Finance, Planning and Economic Development will have 25% and the ICT Ministry 15%.

The new partnership will see RCC make an initial investment of US$25 million, and thereafter, US$200 million over the next three years.

There have been raised eyebrows about the end of the existing contract with a network planning and design  company called Soliton Telmec that was contracted by National Information Technology Authority – Uganda (NITA-U) to manage the NBI. The government doesn’t want to delay the recapitalisation opportunity for UTel, so Soliton Telmec will, presumably, be paid off after being asked to end its involvement three years early.

Once UTel takes over, the government hopes to turn the NBI into more than just a tool for public agencies, by targeting private sector clients and thus, it hopes, boosting revenue.

A UTel Board has been appointed comprising members from government and RCC, which will make a formal resolution that will create a bank account for the initial investment to be made.

As for the questions that this move might invite, they mainly involve the details of how UTel can be turned around. We reported that Rowad’s involvement was first mooted last August, less than two years after UTel was placed under court-appointed administration.

It’s hard to judge the likely success of the government’s plans at this early stage but it can reasonably be said that turning UTel into an efficient, competitive company probably won’t be easy.

This article originally appeared in Developing Telecoms