MTN Uganda’s initial 20-year license to operate in Uganda expired on 20th October 2018. At that point in time, the company sought for a renewal of the permit from Uganda Communications Commission, with a set of conditions put up to effect it.
Like we reported to you, the terms put across included; listing the telecom company on the Uganda securities exchange market, nationwide coverage in addition to allowing customers switch from its network to another without the need to change a SIM card.
This meant that, within 12 months after license renewal, MTN will have to invest in network upgrade to ensure that all villages of Uganda have uniform access to the 4mbps speed internet. The company must also have their IPO and become 30% locally owned.
There was a lot of push-and-pull in the midst of granting the license, and this prompted UCC to grant the telco a 2-month temporary permit with effect from November 20th 2018, thus expiring on 20th January this year.
This was, reportedly, to allow President Museveni to review and verify the granting of the license at $58 million for 10 years, an amount that the president finds so distant from the initial $100 million required of the company.
The uncertainty
It happens to be that during the renewal process, UCC discounted the license renewal fees for MTN from $100 million originally proposed to $58 million. It is not clear under which terms the fee was discounted but reports indicated that the lack of a fixed figure for licence left no option for both parties but to negotiate.
This is what could have prompted President Museveni to write to the commission, inquiring “why they reduced the fees to a far less than the originally proposed amount’, and thus putting the license renewal in uncertainty.
It is also reported that the president was not happy with the Finance ministry and Uganda Revenue Authority being ruled out of the negotiations to determine the final figure.
How is the license fee weighed in?
According to the 1998 licensing agreement, the regulatory body – UCC, is required to negotiate with the telecom company on the amount by proposing a figure which the operator responds to.
In 1998, MTN Uganda was charged a mere $6 million. This was quite a low amount, but given that there was a limited range of services to offer being voice and SMS messaging, and the then poor infrastructure, you can’t find it an issue worth debating about.
But with the number of services offered by the telecom sector increasing every other day data, mobile money and other services, UCC sought to charge MTN Uganda $100 million for a renewal.
The company is said to have responded to the charge with $22 million, with the two parties eventually agreeing on $58 million for 10 years, though the telecom still finds the amount much more than it pays else where.
MTN license fees in other countries
In Kenya, Safaricom paid just $27m for the same 10 years license renewal. In Ghana, MTN was as well charged $58m for 10 year license. Nigeria, which has over 80 million MTN subscribers, charged MTN $94.2m for 10 years.
Zambia charged MTN $137m, Benin asked for $200m license fees for 15 years, while Ivory Coast charged them $180m for 10 years. In each of these three countries, telecom prices got distorted and investments in the telecom industry were put to chaos – thus chasing away potential telecom investors.
We await to see what unfolds in the aftermath of all this.
