Top city lawyer Bob Kasanga has warned Uganda government against repossessing Uganda Telecom Limited [UTL]. Mr Kasango argues that the directive of President Museveni to repossess struggling and debt ridden UTL is flawed and that Uganda could face serious legal battles citing a similar case with Zambia after it was ordered to pay Libya $380m for nationalizing Zamtel.
The Libyan Investment Authority (LIA), the investment arm of the Libyan government dragged the Zambian government to court for abruptly reversing the sale of Zamtel without compensation. The Libyan company owned a 75 percent share of Zamtel while the Zambian government owned 25 percent.
“The expropriation of LAPGreen Assets in UTL will land us in bigger trouble. Why are we trying save UTL anyway? What’s its strategic value to the nation? Why should we pump billions of tax payer shillings into an entity that isn’t commercially viable and people have to be forced by Presidential Decree almost to deal with it?” wondered lawyer Kasango.
He said the decision Uganda took to expropriate the shares of LAPGreen will come back to bite the country.
“The Shs.200bn that the President has directed be converted into equity is nothing but creative accounting to shore up a non-viable entity, and we will as in the case of Zambia pay more in the long run. We are just stupidly postponing a problem,” he warned.
UTL is bleeding financially in local and foreign debts amounting to Shs128 billion.
Industry players have since accused the Minister of State for Privatization, Evelyne Anite and the Official Receiver of over-zealousness and lacking knowledge in corporate law issues and commercial contracts with States hence misadvising the president on the state and future of UTL.
Separately, Kasango warned that the President’s directive “promotes anti-trust practices and rewards technological stagnation and lack of entrepreneurship”
The lawyer wondered why the president is directing all government agencies to procure services from when UTL, a 2G network “when we are heading for 5G.”
“To get to 5G technology, UTL needs a quantum jump and that will mean injecting into at least $100m to bring it up to speed. And what message are we sending to companies that invest heavily in Research and Development and Technology, to stay ahead? And why did we privatize UTL in the first place? The very reasons we privatized it are the very reasons we are expropriating it now! We have come full circle – we have learnt nothing and forgotten nothing.”
UTL has been a troubled network and it could also drag the government of Uganda into a legal trouble should the Libyan government pursue a court case.
