After the government’s bitter parting of ways with the Libyans over the running down of the former Uganda Telecom, just before Christmas it was announced that the rebooted Uganda Telecommunications Corporation Limited (UTCL) has signed on Dubai-based, Rowad Capital Commercial as an investor.
UTCL is jointly owned by the finance ministry and the Ministry of ICT and National Guidance on a 60%-40% basis.
Against a backdrop of a subscriber exodus which intensified about 2012, the biggest challenge facing UTCL, is winning back hearts and minds. Convincing the public they can do a better job of sustainability than Uganda Telecom.
It is going to be a huge marketing feat, because the old brand took a heavy beating. UTCL has limited wiggle room for error, but under its new logo and tagline: ‘Your network, our pride’, the message is they want to start with a clean slate.
In 2017, Uganda Telecom was placed in receivership. Up to this point, the company was barely generating revenues, starved of new investment funds, besieged by creditors and burdened by out-dated or quickly depreciating equipment. While competitors were rolling out 4G, Uganda Telecom was being desperately hawked to potential suitors. Contrast this with 10 years earlier when the company was among the first across East Africa to offer 3G.
The two attempts to sell it off ended in recriminations. Taleology, a Nigerian outfit, could not raise the promised 10% down payment on a $71 million bid. Mauritius Telecom, offering $45 million eventually developed cold feet in light of the Cabinet in-fighting surrounding the sale and probably self-doubt in performing a turnaround.
Uganda Telecom’s rising debt was baggage no one wanted. In 2017 it was $50 million. By 2022 the figure had ballooned to $200 million. Fed up with the whole wooing process, towards the end of that year, the government paid $95.5 million for all the Uganda Telecom assets, including land, buildings and network infrastructure then handed them over to the recently incorporated UTCL.
UTCL says it provides voice and data communication solutions that include fixed telephony, mobile telephony, ISP and data services. UTCL has the largest fixed line and ISP network in the Uganda, with a 3G network that offers video telephony, high speed internet, video and audio streaming, live television and MMS among others.
Rowad Capital Commercial describes themselves as specialists in the provision of advisory and consulting services in the Middle East and Africa. Its services include government relations, international financial transactions, and advising clients on the export of industrial capacity and infrastructure development.
It was not revealed what exactly RCC is bringing to the table, but President Yoweri Museveni was optimistic enough. Officiating at the signing of documents for the joint venture, he said the government wants to regain its commercial footing in the telecom industry.
He said, “The telecommunications sector has grown a lot. Most of it has been by MTN, which I first welcomed here and the others that came later such as Airtel. They (telecoms) created jobs at the right time, but this one, because it is a joint venture– once they make profits, they give dividends to the government, which is good.”
Right now, talk of profits is being perhaps too optimistic. No changing of names can mask the glaring fact that there is much ground to make up on the two market leaders, MTN Uganda (54%) and Airtel Uganda (45%).
The question is whether there is any space for UTCL. Smart, Africell, Orange and Vodafone have come and gone as MTN and Airtel have strengthened their grip. Together, the two telecoms have already successfully bid and won nearly 70% of the available 5G spectrum after an auction by the industry regulator, the Uganda Communication Commission (UCC) during mid-2023.
Both will also be keenly eying UCC for any signs of market distorting favours given to UTCL. According to GlobalMonitor, a firm that which provides syndicated consumer insights, foresights and strategy, ‘increasing regulatory involvement determined by political opportunists rather than market or consumer needs is likely to hamper existing and new investors activities in the Uganda telecom market in the coming years’.
As a state entity, UTCL enjoys certain in-built advantages. It can draw upon the resources of its two shareholders. For instance, the finance ministry can guarantee its loans. Secondly, all government ministries, departments and agencies (MDAs) will be encouraged if not directed as a matter of policy, to use UTCL services. Thirdly, Evelyn Anite, the state minister for investment and at the behest of the President, will not entertain another failure. It helps that she has a very tenacious personality, but the market is the final arbiter.
The steady rise of smartphone usage means telecoms are in a fierce competition to provide high-speed data, but at affordable rates and without going broke at the same time. Voice is important, but data has become king.
Besides sound management, for any chance for UTCL to succeed, everything begins with access to a large pile of cash. The only way we can judge government’s commitment to UTCL or cause rivals to sit and take notice, is the disclosure of the investment amounts being proposed and hopefully keep away the predators who swoop in to take advantage with questionable procurement contracts.
The company needs to modernize infrastructure, hire new talent, and motivate staff on top of refreshing its range of services in a manner that will capture the public imagination.
Once upon a time, previous versions of UTCL were major players in Uganda’s telecom industry. Today, it’s a bit player. It would be a mistake to go toe-to-toe with MTN and Airtel because the capacity is not there.
Perhaps this is where RCC comes in. As an associate RCC company, Rowad Telecom Group claims to have held successful consultancy roles at officer and board level in Greenfield launches, mature operations and from large-scale turn-around business change throughout Europe, Central and Eastern Europe, Levant, Middle East, Asia, the Americas and Africa.
The average mobile subscriber of today is not the same one of 20 years ago. Relatively younger, more tech savvy and decidedly more cost conscious, the prestige of owning a phone is far less important than the reliability of the chosen network. Social media and the surge of e-commerce is driving data demand. As a basic pointer, more than 60% of Ugandans make or receive payments on their phones.
MTN Uganda and Airtel Uganda have grown comfortable in their duo dominance. What UTCL needs to do is to become a disruptive force, (similar to how Warid shook up things), choosing those areas of the market where it can be the most competitive.
‘It’s all about U’ was one of the best brand slogans ever crafted for a Ugandan company—instantly engaging by being short, simple, and full of promise. It’s a pity that in the end, Uganda Telecom failed to live up to that promise.
There is no short-cut to gaining and sustaining consumer confidence. Any pride that UTCL hopes to cherish will only be derived by the level of its performance. Frequently patriotism comes up which is unfair; no one wants shoddy services.