A creditors meeting that will decide the fate of Uganda’s oldest telecom company – Uganda Telecom (UTL) is ongoing in Kampala.
TheUgandan reported about the how top managers of UTL, CEO Mark Shoebridge, board chair Stephen Kaboyo and Corporation Secretary David Nambale were recently sacked to pave way for investigations into the company operations.
Evelyn Anite, the state minister of finance for investment and privatization confirmed UTL has been put under provisional administration for one month (from April 28) before government makes another decision.
The government in February took over the heavily indebted company after its Libyan majority shareholders pulled out. The Libyans owned a 69-percent stake in the company.
UTL went into provisional administration following the appointment of the Registrar-General, also Official Receiver, Bemanya Twebaze, as its provisional administrator. By law, the provisional administrator is required to call for a meeting with the creditors, which meeting is ongoing momentarily.
According to Twebaze, at the meeting, creditors is required to decide whether the administration process should continue or the company goes into administration or winding up.
Twebaze says closing down the UTL would significantly affect the value of the assets and their disposal can be a slow, painful and hectic process with potentially reduced payments to the creditors.
The meeting is closed to the media, but Provia Nangobi, the publicist of Uganda Registration Services Bureau, says a communique on the outcome of the meeting will be issued later.
The government announced on March 01 that it was taking over Uganda Telecom Ltd (UTL) following failure by the Libyan majority shareholders, the Libyan Post, Telecommunications & IT Holding Company (LPTIC), to inject more money into the venture.
The government move came five days after LPTIC announced it was stopping further funding UTL on Feb.25.
Then Stephen Kaboyo, still UTL Board chairperson in an interview described the departure of the Libyans who controlled 69% of the company as a “voluntary abandonment”.
Kaboyo explained: “The reason why I say voluntary abandonment is that they were not forced to leave UTL. They decided to exit on their own and are no longer interested in the affairs of UTL. This is exemplified by their decision to instruct their board members to resign.”
“These are people who invested a lot of money in the company and possibly have looked at the financial standing and realised that their return on investment is very low and/or the market dynamic cannot sustain UTL’s operation.”
Voluntary abandonment is a technical word meaning voluntary surrender of an asset by an entity to which the asset rightfully belongs without the entity indicating a successor to the right of ownership of the asset.
Under law, an abandoned asset is taken over by the state. However, there are procedures to be followed and it not clear if they were indeed followed.
Any omissions often pop up to frustrate business transactions in cases like this, experts say.