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Dubai billionaire takes over Uganda Telecom Ltd

Peter 30th Oct, 2024 Telecommunication Business Edge Reporter
Dubai billionaire takes over Uganda Telecom Ltd

Dr al Taki (R), the RCC boss, and Baryomunsi sign the deal at State House. PPU PHOTO/BUSINESS EDGE


A multi-billion-dollar investor based in Dubai in the United Arab Emirates (UAE), has acquired a majority stake in the Uganda Telecommunications Corporation Limited (Utel) following the signing of an agreement with the Government of Uganda.

According to a press release, Dr. Chaher Al Taki, the proprietor of Rowad Capital Commercial (RCC), signed the deal with Uganda’s Minister of ICT and National Guidance, Dr. Chris Baryomunsi, at an event that was witnessed by President Yoweri Museveni at State House, Entebbe.

In his remarks, President Museveni stated that the milestone was important because the government is keen on creating jobs for Ugandans. “Our main interest is to get investors to create wealth and jobs,” he said.

  • Al Taki said he was extremely delighted to finally see the project come to fruition and pledged to open up other new projects in Uganda.

“I am very happy to be here at the State House to meet His Excellency President Museveni and the government officials who have come to bless the signing of the agreement. Uganda is our second home, and we can invest in more projects here as we had promised,” he said.

Reports of RCC’s interest in Utel first emerged in August when press reports suggested that Rowad Capital Commercial was keen to invest an initial $225 million in it’s the telecommunications operator in exchange for a 60% stake.

  • Founded in 2017, RCC comes on board to faceoff with stiff competition in a telecommunications market dominated by South Africa’s Mobile Telecommunications Network (MTN) and Airtel Uganda, a subsidiary of Bharti Airtel Limited, a global telecommunications company based in India.

Following the splitting of Uganda Posts and Telecommunications Corporation in 1998, UTL was partially privatized in 2000, with a consortium led by Telecel International and the Dhirani Group acquiring a 51% stake. The government retained a 49% share. This marked the start of UTL as a private-public partnership and led to significant modernization of the telecom infrastructure.

In the early 2000s, UTL rapidly expanded its operations, providing both fixed-line and mobile telephony services. During this period, it introduced internet services and mobile solutions such as Mango, a mobile service provider.

However, competition in the Ugandan telecom market intensified as other telecom companies like MTN Uganda and Airtel Uganda gained a foothold, challenging UTL's dominance.

By the mid-2010s, UTL began experiencing severe financial difficulties. Competition, mismanagement, and growing debt resulted in significant challenges for the company.

  • The Libyan investment fund Libyan Post, Telecommunication, and IT Company (LPTIC), which had acquired a major stake in UTL after Telecel International's exit, faced sanctions following the fall of Muammar Gaddafi's government, further complicating UTL's financial situation.
  • In 2017, UTL was placed under provisional administration due to its heavy debts, and the Ugandan government took control of the company. At the time, the company’s debts were estimated to be around UGX700 billion (approximately $190 million). The government subsequently expressed its intent to find new investors to restore the company’s operational capacity.

Analysts say Utel remains an important part of Uganda’s telecom landscape, particularly if Government Ministries, Departments and Agencies (MDAs) are directed to acquire their mobile, fixed-line, and internet services from it.

In 2018, the government sought to have Utel take over certain NITA-U responsibilities, such as providing internet services to MDAs. This decision came under a presidential directive, emphasizing that all government ministries, departments, and agencies (MDAs) should switch to UTL for internet services.

NITA-U, which Parliament recently blocked from being rationalized (scrapped), has resisted this shift, citing concerns over service duplication and billions worth of outstanding payments owed by MDAs to Utel.

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