By John V Sserwaniko
Highly experienced Gordian Kyomukama is now CEO MTN Uganda, the country’s largest telecom entity with over 11m active subscribers. He got to hold the CEO position in acting capacity following the dramatic deportation of Wim Vanhelleputte who had been CEO for 30 months counting from 2016. Wim’s banishment (resulting from his decision to allow previously deported employees to continue doing MTN Uganda company work) was preceded by that of CMO Frenchman Olivier Prentout, Rwandan Ann Tabura and Italian Elsa Muzzolin. The 4 remain vaguely accused by the Ugandan state of engagement in activities prejudicial to national security. The precursor to all this was the 2nd July 2018 raid by ISO onto the entity’s Mutundwe data center where facility engineer Keefa Musasizi was temporarily confined. The raid was described as paving way for “land mark” criminal investigations by ISO Director General Col Frank Kaka Bagyenda whose men MTN Chairman Charles Mbire later demonized for acting in a “criminal-like manner.” Oblivious of the fact that the worst was yet to come, many thought the Mutundwe raid was all that MTN was to endure. As we now know, it was just curtain-raising as much more has since been witnessed including the unexpected refusal by government to renew the telecom giant’s operating license. They applied for a 10 year license renewal after lucratively operating in the same market for 20 years (1998-2018). The Museveni government has demanded for $100m in license fees against the MTN offer of $58m on grounds the balance ($48m) will be used as part of another $200m the company needs to invest in network upgrade aimed at saturating the whole country with 4G internet network as required under ICT Minister Frank Tumwebaze’s new Broadband policy. Even after meeting MTN Group CEO Rob Shutter, Museveni has remained unusually hardened insisting on a raft of reforms MTN must implement including parting with 30% shareholding in favor of Ugandan ownership. They must also increase visibility of Ugandans in top management positions. Despite betrayal by Parliament which refused to include a provision making it mandatory in the Investment Code Act, Museveni also wants some capping on how much MTN can repatriate out of Uganda at every end of the trading period. In the absence of proper license, MTN has had to do with temporary permits issued by UCC the regulator often lasting 90 days.
PERCEIVED PERSECUTION
Understood to have sparked optimism for better business prospects at rival Airtel Uganda, the ongoing clamping down on MTN’s top executives has led to claims of persecution. Save for General Manager Enterprise Development (the long serving) Anthony Katamba whose purging a few days ago excited many hitherto marginalized MTN employees, the rest of the top managers’ exit has created anxiety among staff notwithstanding expectations that the expatriates’ departure will pave way for Ugandans to take top positions. Wim’s case has perturbed many because not even having Ugandan citizenship (besides being Belgian) made him safer the moment internal minister Gen JJ Odong felt it was his time to go. Married to Barbara Adoso, Wim would alternatively have been prosecuted here under the Ugandan criminal judicial system but fear that the MTN vast network has used money to decisively compromise everybody including judicial officers, made the State doubtful Wim would be properly prosecuted. As of last night there was talk that his Ugandan (dual) citizenship had been revoked to justify his deportation otherwise (without revocation), his banishment is something any public-spirited lawyer would successfully challenge in court as unlawful. In a recent narrative, Ann Tabura whose banishment provoked angry Rwandan protestations accused Ugandan security operatives of acting very viciously in the operation that preceded her deportation back home to Kigali. In her social media rant, she documented the manner in which she and others were persecuted. Ironically despite all this perceived persecution, exiting Ugandan telecom market isn’t something the MTN Group bosses based in SA have thought about or will be pondering anytime soon.
WON’T BE QUITTING
Several factors explain why quitting won’t an option for MTN anytime soon. It has to be observed that Africa’s largest telecom entity (by sales) globally operates in 22 countries and has the largest market share in 14 of them Uganda inclusive. In fact at 56%, Uganda is one country where MTN has the largest proportion of the market followed by Ghana’s 55% and Cameroon’s 54%. In the 22 markets, the MTN Group has a total of 217.2m subscribers 11m of whom are from the Ugandan market where the entity has operated for 21 years now. Whereas market share in other markets has been declining partly resulting from the instability the Nigerian 2015 ($1.6bn) regulatory fine occasioned, Uganda hasn’t had any decline in subscriber numbers. It has for long averaged at 11m subscribers which comes to 56% of all telecom subscribers. It simply means that in every 10 Ugandans with an active mobile sim card, 6 are MTN subscribers. The Nigerian government imposed stringent measures (greatly injuring MTN brand reputation) following the company’s dubious refusal to disconnect 5m unregistered subscribers as had been directed by the telecom regulator. Some of the markets where MTN subscriber numbers and market share has been declining in the past few years include South Africa, Nigeria (from 62 to 52m subscribers), Ghana (19 to 16m), Ivory Coast, Sudan, Cameroon and others. In total, the MTN Group numbers dropped by 23m (from 2016’s 240.4m to 2017’s 217.2m). This loss of subscribers wouldn’t have happened if all the other markets had remained stable like Uganda. So at a time of such increasing uncertainty, it would be imprudent for the MTN Group to exit a market like Uganda implying Museveni will most likely get as many concessions from them as he wishes. The Ugandan big man is said to be increasingly relying on the advice of his business-minded Attorney General William Byaruhanga who the MTN power brokers have so far failed to compromise.
FREE TO EMPLOY
Besides being stable, as illustrated above, Uganda is one market where MTN operates without being subjected to very stringent employment rules meaning they can employ as many expatriates (in whatever position) as they opt to. That is why skilled as he is, Eng Gordian Kyomukama had never adequately been allowed to scale the heights to become MTN Uganda CEO. A very seasoned telecom engineer, forceful Kyomukama has served at MTN since 1998 when the company began operations in Uganda. He was actually head hunted from UTL to join the technical team that pioneered MTN operations here. Having previously worked with MTN Ivory Coast, the man from Kabale has been serving as Chief Technical Officer (CTO) until hours ago when Group Headquarters in SA elevated him to Ag CEO filling the vacuum left by Wim’s deportation. “He is seasoned and very okay but the MTN top echelons in SA always bypassed him claiming much as he was technically very qualified, he lacked the managerial experience,” says a knowledgeable insider at MTN Uganda. Absence of any restrictions on profit repatriation is another attraction for MTN to stay put. The company (that is accused of being one of the many foreign entities responsible for the forex scarcity in Uganda) every month repatriates as much as it wishes without being constrained by any one save for the President’s occasional complaints regarding the same. There was an opportunity last year to impose restrictions as Parliament considered the Investment Code Bill but legislators curiously ignored calls for inclusion of a provision setting a maximum beyond which a foreign business can’t repatriate profits made. Groups had appeared before the relevant committee of Parliament and submitted memoranda suggesting mandatory re-investment in the country but such well elaborated proposals were overlooked by MPs. The only hope is that the President (before whom the Bill is now) acts more prudently by sending it back to Parliament demanding such inclusion.
VIRGIN MARKET
The other reason why MTN can’t consider voluntarily quitting unless forced out (which is very unlikely being employer of many and large tax payer) relates to the fact that the Ugandan telecom market still has vast potential. It’s a country with a very large young population that is easily susceptible to acquisition of the latest mobile phone technology because they are highly educated as well. Available government statistics show that out of the more than 40m Ugandans, slightly less than 50% are already telecom subscribers. That means another more than 20m Ugandans are yet to become telecom subscribers. And being very aggressive at marketing and sales-making, MTN is certain to woo over majority of those.
MASS INVESTMENT
MTN Uganda has also invested a lot in core telecom network requirements including the more than 2,000 network sites, the switches and fiber networks. Under this item, the investment is in trillions and it would be imprudent to just voluntarily walk away after investing so much in a market. Yes there will be image and credibility challenges because already there are discussions among some UN agencies operating in Kampala to shift to Airtel as their preferred telecom services provider on grounds the integrity of their data would be at stake given the glaring loopholes the ongoing State clampdown has exposed in the MTN operations. In a recent newspaper interview, the Airtel CEO clearly came off as one trying to reach out to such high quality and top-spending entities as he portrayed his company as one that is ready to play by the rules set by the State while diligently serving customers. Board Chairman Charles Mbire’s continued ability to have connections and coordinate with top echelons of the Museveni state is further indication all isn’t lost. MTN can still pick up the pieces and carry on while continuing to dominate the market. The state’s alternative would be Uganda Telecom Ltd but continuing failure to attract an investor willing to become majority shareholder makes that a pipe dream. For comments, call, text or whatsapp us on 0703164755.
