A leaner UTL can recover to compete again

May 24, 2017 in Opinion by Editor

May 24—Several years ago, Uganda Telecom came out with a stylish marketing campaign with the catch-line; it’s all about U’.

Since then there has been a U-turn of fortunes for Uganda’s biggest fixed-line network. It is now mired in debt, badly in need of new capital and being battered from all sides from people who should know better.

Instead of going around in circles looking for someone to blame, let’s concentrate on the parts of UTL that can be salvaged and sell off the rest.  A leaner UTL has more chance of making money than the behemoth we have today. Secondly, as crude as it may sound, chopping up UTL into smaller appetizing pieces will attract investor interest, because it is doubtful anyone would buy the whole thing as is.

The most recent audits on the company reveal that total liabilities exceed total assets. Considering the real estate holdings UTL once owned in prime locations this is enough to immediately hang out the ‘For sale’ sign.

Although mobile subscribers have been abandoning the brand for years, leaving less than a million today, there is still some value left in UTL. It possesses the largest fixed line coverage. Mobile offers convenience, but in formal business a geographic location is important and potential clients might not take you seriously unless you have a landline. One must also ask whether that famous costly UTL fibre-optic network is being used to the optimum?

Being sentimental about a business that was a once a jewel of the government’s parastatal family does not help anyone, least of all the 400 remaining employees. They are desperately looking for leadership and a sense of direction. A restructuring plan without money is not reassuring.

It is unlikely that the government can afford to foot the $100 million dollar bill to turnaround the company. More than half of that money is to pay off creditors.  The rest is urgently needed to re-tool and catch up with competitors who during the past 15 years have taken away much of UTL’s usefulness.

There are those who think the government must bail out UTL since there are national security issues to consider. This is not the 1960s or 1970s. There are solutions around this. The big question is even if the government could afford it, how do we know it will not happen all over again? Also if the government bails out UTL then why doesn’t it bail out others?

Finally, there is some irony in that if the government was up-to-date with paying its bills, a substantial chunk of UTL’s problems would not have escalated to this point.