Since 2009, word has been doing the rounds about the inability of Uganda Telecoms (UTL) to meet its business obligations with different service providers. The problem was brought to the fore when in February 2010, MTN took UTL to court for failure to pay interconnection charges for a period of November 2008 to September 2009. A flurry of accusations and counter accusations followed and the eventual court process ruled in favour of MTN.
In January 2011, the same issues resurfaced and this time round MTN was joined by Airtel in demanding payment from UTL for all unpaid interconnection charges. Unfortunately for UTL, this is around the same time that the Arab Spring revolution was taking place in Northern Africa and the Libyan Government, which happens to have a controlling stake in UTL, was under threat from internal dissent. The noose tightened with MTN threatening to stop any interconnection with UTL if the arrears were not paid up. It took some Government intervention to save the face of Uganda Telecom.
On September 1st 2011, mobile phone users were treated to the news that Airtel was going to cut off all interconnection with UTL unless at least UShs 6.5 billion of the 10 billion debt is paid up. Uganda’s Minister for ICT yesterday stepped in to avert this embarrassing scenario. It is believed that Airtel will not go through with the threat.

The questions that still linger though are more to do with the sustainability of Uganda Telecom (UTL) as a business and its ability to survive without continued funding from the Libyan Government. There is a need to avoid the knee jerk responses which have become characteristic of UTL lately and plan for a more permanent solution to the challenges facing Uganda’s oldest telecoms company.

With combined interconnection debts in excess of UShs 25 billion, other debts not withstanding and the failure to post profit for a number of years now, the writing seems to be on the wall for UTL and either a total shake up of the company’s business operations is needed or it’s about time to get a suitable suitor to buy it. Judging by the current expansion drive of France Telecoms into the African market, it would come as no surprise if they scooped up this ailing giant.