Tax collector closes telecom firm over $25,000 debt

May 30, 2018 in Business, Communications, Companies, Finance, Technology & Telecoms by Editor

May 30, 2018—Uganda Revenue Authority (URA) has closed the business offices of K2 Telecom, a mobile network provider over failure to pay a  tax bill of UGX95.8 million (about $25,000).

According to URA officials, the company owes UGX77.8 million in pay-as-you-earn (PAYE) and UGX 17 million in excise duty.

Ian Rumanyika, the Public Relations Officer at URA said the K2 Telecom offices were closed after the company failed to meet the terms of the Memorandum of Understanding that it had reached with URA in 2013.

“We have been in talks with K2 telecom from 2013, but we realised that the terms of MoU were not being met so we decided to close their offices,” Rumanyika said.

He said the offices will remain closed until K2 Telecom clears its debt.  K2 Telecom is relatively small, with an estimated 150,000 subscribers. Its initial novelty was based on a close affiliation with the Buganda kingdom government which has a stake in the company.

Intentions were to exploit the Kiganda love for their Kabaka (King) but subscriber uptake failed to take off in dramatic numbers mostly due to capacity limitations and less than adequate capital investment. This diminished  any customer satisfaction.  K2 Telecom had been relying on Uganda Telecom and Smart Telecom infrastructure for their services which was also a drain on cash flow.

Not long ago, there were reports Airtel Uganda was interested in taking over K2 Telecom, but both parties have declined to say anything officially.  Major shareholders in K2 Telecom include Maria Kiwanuka, a former finance minister and businessman, Kiwalabye Male.