Uganda Telecom Limited, the country’s first local mobile phone network, whose cheaper fees appealed to the youth when it launched services 14 years ago, and retained a core clientele in government, one of its main shareholders, is engulfed in management disputes that have turned its offices at Rwenzori Courts into some sort of battlefield.
Much of the tension centres around two separate pension schemes, where the company has for more than a year defaulted on remitting workers’ savings. As a result, some workers who worried that their retirement benefits have been squandered, have questioned the outgoing managing director’s management style, blaming him for much of the quarrels, all of which could leave the company deeper in financial ruin.
Ali Amir has already agreed to leave his position as managing director of utl in May, citing “personal reasons.” Some staff The Observer spoke to, however, say he should leave earlier.
Amir’s resignation is being seen as the tipping point to what has been a turbulent time for a company that has struggled to stay float amid, and after, United Nations sanctions on its parent company, Libya’s LAP Green Networks, on top of the stiff competition from MTN and Airtel, both of which remain more aggressive in the market, especially on the lucrative mobile money platform.
Matters have now come to a head with some members of staff considering going on strike unless the matter regarding their pension is resolved.
“We want him to leave or else we are ready to go on strike and drive him to Entebbe airport,” said one of the staff’s ringleaders, who did not want to be named as he is not authorized to speak on behalf of the disgruntled group.
PENSION WOES
The company, however, says such staff are few and do not represent the general feeling among the workers. Utl adds that it is trying to resolve the issues around the workers’ pension. About a month ago, according to our sources, word leaked that utl was not remitting workers’ pension to NSSF and an in-house scheme called Uganda Communications Employees’ Contributory Pension Scheme (UCECPs).
Utl is supposed to remit 15 per cent of the workers’ gross salary to NSSF. The company is also supposed to make a certain contribution to the UCECPS. However, since June 2013, utl has failed to honour its obligations, according to documents seen by The Observer. Utl blames government for the predicament it finds itself in.
“It is true there are some arrears with NSSF, partially caused by government’s failure to pay its telephone and internet bills worth Shs 7bn. Had these bills been paid, all eligible staffs’ NSSF arrears would have been cleared,” a utl official told The Observer.
There are now allegations that there is some collusion between NSSF and some top Utl managers over the failure to remit workers' pension. Some staff of utl, through their lawyers, Barya, Byamugisha, and Company Advocates, wrote to both the managing directors of utl and NSSF in February 2015, stating that “On top of failure to remit the statutory contributions to NSSF and the UCECPS which is also a breach of your own terms and conditions of service, you (utl) have decided to add insult to injury by entering into a conspiracy with NSSF to deny utl workers of their accrued rights…”
Utl disputes this accusation, and labels any insinuation of collusion with the fund as “absolutely false.”
Instead, utl explained that it has “asked NSSF to verify how much excess contribution has been paid by utl to NSSF in error for several years in respect of ineligible staff.”
It adds: “The staff in question are those inherited from the former Uganda Posts and Telecommunications Corporation [which was unbundled in 1998] who are entitled to pension from government and UCECPS. NSSF, after obtaining confirmation from the solicitor general, is at this point in time verifying what the excess amounts paid amount to.”
Utl says its troubles would have been avoided had government paid its arrears. In November 2014, Utl, through their lawyers, Mubiru, Musoke, Musisi and Company Advocates wrote to the ministry of Finance, and demanded that telephone bill arrears worth Shs 7.2bn be paid before year-end.
EXPENDITURE LIMITS
The money was never paid. A month later, on December 29, 2015, Keith Muhakanizi, the permanent secretary in the ministry of Finance, wrote to all ministries and communicated to them the expenditure limits for the first quarter of 2015. In that particular letter, Muhakanizi attached the telephone bill arrears due to utl and asked them to verify and clear them.
The biggest defaulters on utl telephone bills, according to that list, were the ministry of ICT and the Uganda Communications Commission, the firm’s regulators, who have combined arrears of Shs 2.4bn. In total, there are 19 government ministries who owe utl money.
Utl says that once these government institutions clear the debt, the pension dues will be “immediately cleared on priority basis.”
That utl, at a time when its management is facing criticism and all sorts of outbursts from its staff, is depending on money whose payment faces further delays perhaps speaks volumes of the financial dilemma at the firm.
It is not clear how much arrears NSSF is demanding for or whether the Shs 7.2bn that utl is pinning its hopes on could calm the situation. What is certain, though, is that LAP Green Networks, the firm’s parent company with a 69 per cent shareholding, appears to be reluctant to pump money into utl, its largest telecom operator among its eight units.
In its 2014 third quarter filings, LAP Green said it had reduced the debt within its books, and also tried to cut down the losses on its earnings. The company, however, said it still faced challenges. The firm said European Union sanctions continue to hamper its business lines.
In 2011, the European Union adopted the UN measures and agreed to independently list persons involved in or complicit in human rights abuses and violating international law during the fall of the Muammar Gaddafi regime that same year. The sanctions mainly revolved around freezing assets of targeted Libyan firms and persons.
With government and LAP Green, the two main shareholders in utl, failing to meet their financial obligations, the telecom is struggling to stay afloat, with managers barely making it beyond two years.
For example, in March 2011, Donald Nyakairu was promoted to the position of managing director. His role was to steady the utl ship as Libya was burning up in smoke.
Nyakairu only stayed in that position until May 2012, just one year and three months.
After Nyakairu, LAP Green hired David Holliday in June 2012, saying he was “an internationally experienced executive.” However, Holliday, would not last long at utl, and by July 2013, he was out after just a year.
OTHER TROUBLES
Throughout this period, utl experienced other financial troubles such as court awards, especially paying MTN Uganda’s Shs 5bn. Utl also defaulted on its tax and begged for grace periods.
In July 2013, Amir was handed the task of bringing order to the telecom firm. The poisoned chalice that is utl’s top seat would yet again rear its ugly head, with Amir’s tenure becoming untenable just a year and a half later.
There have also been other key management changes such as Shailendra Naidu, who joined from Warid Telecom, to become utl’s chief commercial officer in September 2013. He only managed to stick around until November 2014, just a year and three months. Also, Russell Saunders, utl’s project manager, was recently fired after just over two years.
Nevertheless with all these firings under Amir, the company says he helped it post a 40 per cent improvement on loss after tax in 2013 and a 20 per cent improvement on EBITDA [a more refined form of describing earnings] in 2014.
It’s not Amir’s legacy that the public should be worried about as he, too, prepares to leave with a trail of heartbreaks behind him, but how a telecom company that promised a lot could find itself in such a mess.
Source: The Observer
