Prime
We are closely following events at Smiles’ parent company - UCC
Smile Uganda, which is a subsidiary of Smile Telecoms Holdings has operations within Kampala and other cities. PHOTO/COURTESY
What you need to know:
- Two of Smile’s largest shareholders are locked in a dispute that is threatening the company’s stability.
Uganda Communications Commission (UCC) has said it is keenly following a dispute in which two of Smile Telecom Holdings’ largest shareholders are locked in a disagreement over a contract that gives the majority owner the right to sell a specified amount of an underlying security, also known as put option.
The two shareholders, including, Saudi Arabia’s Al Nahla Group, which holds the majority stake and South Africa’s Public Investment Corporation, had until March 24 to agree on the put option, failure of which the company would face liquidation. Smile Telecoms Holding has not officially communicated on the status of the negotiations.
However, Ms Beatrice Kiraso, the Smile Telecom Uganda chairperson, yesterday told Daily Monitor Smile Telecoms Holding shareholders and lenders had on March 30 concluded negotiations and agreed on a repayment schedule that will give shareholders enough time to mobilise new capital.
“Shareholders have agreed. Of course, as you know this is a highly capital intensive business. There are changes in strategy almost every after a certain period. This was just a discussion between the company and some lenders,” she said, noting that it was not true that shareholders and lenders had failed to agree on a way forward.
Smile has close to $250m held in debt and equity funding. Bloomberg reported last week that in 2015 Smile had raised $365m in capital, of which $50m was equity funding from Public Investment Corporation, while $315m was a multitranche facility sourced from African Export-Import Bank, Development Bank of Southern Africa, Diamond Bank PLC, Ecobank Nigeria, Industrial Development Corporation and Standard Chartered Bank.
The dispute had come on the back of two high level exits in January, in which Smile’s two co-founders - Irene Charnley and Mohammed Wajih Sharbatly - stepped down from the board to give way for restructuring specialists.
The company in January launched a restructuring plan in which Al Nahla had proposed to inject more than $50m (Shs185b) provided Public Investment Corporation extended the terms of an option to sell its stake to other shareholders for $45m.
However, last week Public Investment Corporation said that whereas it supported the restructuring plan, it was still engaging shareholders in Smile to find ways of preserving value for its clients.
Yesterday, Ms Irene Kaggwa, the UCC executive director, told Daily Monitor that they were following the events in South Africa and would protect Smile’s clients in case of any eventuality.
“We haven’t heard any communication from Smile Telecom Uganda who are licensed here. But within the licence process there is a provision to make sure that there is continuity,” she said in response to our inquires, adding that whereas they could not stop which ever process Smile chooses, UCC would ensure that customers are not left in the open.
Founded in 2007, Smile Telecom provides broadband services in Uganda, Nigeria, Tanzania and DR Congo.
In Uganda
In Uganda, Smile was established in November 2009 and launched its 4G LTE operations in June 2013 in Kampala. It has since expanded its 4G LTE services to other cities and towns including Fort Portal, Gulu, Jinja, Kabale, Masaka, Masindi, Mbale, Mbarara, Mukono, Soroti, Tororo, and Wakiso.
