Uganda’s biggest telecom giant MTN has finally ended the 3-year brawl with the government, and it has secured a 14 year long term licence that guarantees its operations in Uganda in the future.
Sources reveal that the final agreement was reached at a meeting on Wednesday 11th March at the Ministry of ICT and National Guidance offices and attended by officials from the regulator Uganda Communications Commission (UCC), the Ministry of Finance and MTN executives.
As part of the new licencing regime that was proposed by the UCC recently, MTN Uganda will list at least float 20 per cent of its shares on the Uganda Securities Exchange, and pay $100 million in blanket taxes for a 14 year licence. This a good deal for MTN Uganda as it saves the company $18 million. A year back, MTN has been required to pay at least $118 million (UGX 438 billion) for a 10-year licence. If the company wishes to have the permit for up to 15 years, they would have to part with $150 million (UGX 557 billion). But this has now been slashed down to just $100 million for 14 years.
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The Uganda Revenue Authority must be the happiest body in this deal as well, as the tax body will collect $100 million which will be paid by MTN Uganda in two installments of $50 million each, with the first payment expected as early as March 15, and the second in April or before the end of the financial year.
Commenting on MTN Uganda’s deal with the government, State Minister for ICT Peter Ogwang said on Friday.
It is true that MTN agreed to pay the $100 million in return for a licence for 14 years. As government, we had wanted to give them 10 years but they explained that they have to invest in infrastructure upgrades and that their investment plan will see them injecting an extra $260 million over the period so we agreed on 14 years. They also agreed to start the process of public listing which requires them to list at least 20 per cent of the company shares within the first two years of licensing
MTN Uganda’s Licence details
The new licence categories are: National Telecom Operator License, National Public Service Provider, Regional Public Service Provider, National Public Infrastructure Provider and Regional Public Infrastructure Provider.
From the new proposed licencing regime that comes into force on June 30 , MTN Uganda will get a long term National Telecom Operator License for which the company will be required to guarantee 100 per cent geographical coverage of the country with a minimum of 4 mbps internet speeds in rural areas and 8 mbps in urban areas. Other operators that have applied for the same category include Airtel Uganda and the government-owned UTL (UTL is a story for another day).
Airtel Uganda and Africell have been operating both NPSP and NPIP licences, but under the new structure, they are required to operate one of the two.
Fees for the National Telecom Operator licence is subject to negotiation along the annual minimum value, renewal or migration and fees computation. Licence holder will pay a minimum of $300,000 per annum and 1.23 per cent of prior total audited gross revenue for renewal or migration. The licence fee will be assessed on the “basis of total gross revenues of last year ended audited accounts, multiplied by licence tenure.”
