Even when it’s what MTN told President Museveni in Davos Switzerland last week, it’s simply not possible for NSSF to sufficiently take up shares in the telecom giant to the levels (30%) which the big man desires to see. That illusionary promise by the MTN top executive is exactly what we are illustrating in this simple story. During crisis talks in Davos Switzerland last week, MTN Africa Group CEO Rob Shuter told the Uganda leader that his concerns of lack of local ownership and participation in MTN would be appropriately addressed the moment talks with Mr. Richard Byarugaba’s NSSF are concluded. Shuter, who flew to Davos to meet Museveni at the height of the Ugandan State crackdown on MTN in Kampala, told the President that NSSF was to take significant shareholding in MTN whose executives are uncomfortable with open listing on the Stock Exchange market ostensibly fearing exposure to dirty money. It’s also true the MTN officials are nervous and cautious because they have over the years exercised too much power and are naturally uncomfortable with resultant scrutiny that comes with open listing. Whereas dealing with NSSF limits participation to its 2.5m registered members, open listing permits participation by larger number of people buying in-something the MTN leadership isn’t very comfortable with. So economically important is MTN Uganda that of the 9.8% the ICT sector contributed to the country’s GDP last year, it alone accounted for 63% yet Museveni is intrigued that of the vast profits made monthly, a whopping 95% is repatriated for the enjoyment of shareholders in SA leaving only Charles Mbire’s negligible 5% here. MTN denies this charge saying only 12% of the profits made is repatriated to SA for the shareholders as the rest remains here to cater for tax obligations, government fees and reinvestment in the network. Museveni wants that anomalous ownership structure altered so that not less than 30% is locally owned. It should be recalled that claims of intention to sell to NSSF have been on since late 2000s when the process halted after the Temangalo scandal occasioned reputational damage to NSSF.

MTN Group CEO Rob Shuter


In his latest revelation of the NSSF being on the verge of concluding the share takeover deal, CEO Shuter wasn’t being wholly truthful as there is no way NSSF alone can take up to 30% shareholding in MTN or even 25% (excluding the 5% Mbire already has). And here is why: NSSF is constrained because there is a limit beyond which a proportion of its assets can’t be invested in equities (share-acquisition). The current situation is that NSSF can legally not invest more than 25% of its assets value in equities. Insiders say that currently, NSSF’ total assets value is Shs10trillion (roughly equaling $2.7bn) of which 16% is already exposed or invested in equities/shares-acquisition in the different business entities. This means that only 9% (of the permitted maximum of 25%) remains unexposed. And 9% of Shs10trilion (available for investment in equities) translates to Shs900bn (roughly $243m). That is the only amount NSSF still has or remains with for investment in equities. MTN total value is currently estimated at Shs7.2trillion ($1.9bn). This means with its Shs900bn remaining for investment in equities (share-acquisition), NSSF can only take up 8% of the MTN total value yet Museveni wants not less than 30% locally acquired and owned as part of the telecom giant’s 10 year license renewal conditions. It’s also very likely that NSSF may not be comfortable depleting its equities-acquisition potential by entirely blowing its remaining Shs900bn onto MTN. They might wish to keep some meaning they might end up taking less than 8% shareholding in MTN which Museveni has consistently accused of transfer pricing and under declaration of revenues in order to diminish their tax obligations. Museveni has also accused MTN of indifferent repatriation of profits made, a claim he repeated to Group CEO Rob Shuter during the Davos engagement. In cracking the whip, the Uganda government is following on the Rwandan government which in December 2017 acted with same firmness against MTN Rwanda. Available information shows that Rwanda Utilities Regulatory Authority punished MTN’ abominable criminal acts by imposing a fine of $8.5m which the Telco paid in instalments over a period of 6 months. What had they done? The Rwandan authorities suspected espionage activities after establishing that MTN executives had in May 2017 illegally transferred the hosting of the server (used to store calls, messages and internet consumption records) to Kampala under the direct control of MTN Uganda. According to the East African newspaper, this transfer of the server breached licensing conditions besides undermining the integrity of the relevant data pertaining to the telecom’s Rwanda customers.



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