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Auditor General faults UCC over failure to recover Shs2b from Smile Telecom
Smile has had a series of challenges, among which include, a dispute with American Tower Company, which have disrupted its operations. Photo / File
What you need to know:
- Part of the money, the Auditor General notes, is due to outstanding payables and violation of its licence, in which Smile, without authority from UCC, discontinued its services in January last year, thus attracting a fine of up to 10 percent of its gross annual revenue.
Auditor General John Muwanga has faulted Uganda Communications Commission (UCC) over failure to recover Shs2b from Smile Telecom.
Part of the money, the Auditor General noted, was due to outstanding payables and violation of its licence, in which Smile, without authority from UCC, discontinued its services in January last year, thus attracting a fine of up to 10 percent of its gross annual revenue.
“Smile discontinued its [service] in January 2022 without authorisation … UCC, however, did not suspend or revoke the licence as guided by the [law]. [UCC] did not fine Smile for violating the terms and conditions of the licence. Furthermore, I noted that Smile has an outstanding obligation to Shs227.3m and $505,079.47 ((Shs1.8b) payable to UCC,” the Auditor General’s report reads in part, noting that because UCC had not put measures in place to recover the money, there was a risk of losing the funds given that Smile had discontinued its services.
However, in response to the query, UCC indicated that Smile had applied for a Regional Public Service Provider and National Public Infrastructure Provider (PIP) licence but changed to a Regional PIP and Regional PSP licence, noting that the process is still ongoing.
UCC also noted that save for the general authorisation issued to transiting operators, Smile did not have a valid licence. The Auditor General’s report further indicated that Smile discontinued its services after American Tower Company (ATC) disconnected it over failure to pay accumulated tower carriage fees.
Smile has since taken ATC to court over irregular and unfair treatment. The case is yet to be disposed of.
Yesterday, Ms Irene Kaggwa, the UCC acting executive director, told Monitor the dispute had paralysed Smiles’ operations, forcing the telecom to go off.
However, she noted, the dispute had happened at a time when UCC was in the process of considering Smile’s application to migrate to a new licensing regime.
Under the UCC (fees and fines) Amendment Regulations 2020, any operator who without authority discontinues services is liable to a fine of up to 10 percent of gross annual revenue.
Ms Beatrice Kiraso, the Smile chairperson, said yesterday she had not read details of the Auditor General’s report, noting that she would give an official communication after reading it.
Smile has had a series of challenges including a dispute in 2021 between two of its shareholders in South Africa in which they had disagreed over a contract that gives majority owners the right to sell an underlying security. The two shareholders, included Saudi Arabia’s Al Nahla Group and South Africa’s Public Investment Corporation.
However, Smile subsequently indicated that shareholders had agreed on a refinancing plan that would see majority owner, Al Nahla Group, commit $51m in fresh capital.
Transitioning to data only
Smile, which has origins from South Africa, has operations in Uganda, Tanzania, DR Congo and Nigeria.
The telecom started operations in Uganda in 2009, providing both voice and data services.
However, by 2013 Smile had transitioned to data only services but in February last year, it informed subscribers that its network was experiencing a slowdown in internet speeds, or even, no access at all.
The challenge went on until May when Smile indicated that its service disruption was a result of a fundamental dispute between Smile and one of its critical suppliers, which after failure to reach an understanding, the matter had been taken to court.
