Cash-strapped K2 Telecom subscribers will be absorbed by Airtel Uganda, offering a lifeline to the Buganda Kingdom-owned telco two months after it was shut down for failure to pay taxes.
Airtel, the country’s second largest telecom, has taken over K2’s network operations with the latter left to operate as a virtual telecom, an official from the regulator Uganda Communications Commission (UCC) said on Friday.
“All network and quality issues are set to be managed by Airtel as of today running until 2021,” said Mr Abdu Salaam Waisswa, head of legal at UCC.
The EastAfrican understands that as part of the deal, customers will be able to buy co-branded K2-Airtel sim cards with K2 receiving loyalty fees from the sales.
The Uganda Revenue Authority ordered the closure of K2 Telecom after it accrued Ush94.8 million (about $25,000) in tax arrears over four years. K2 owes the taxman Ush77.8 million ($20,000) pay as you earn and Ush17 million ($5,000) excise duty.
URA’s head of public and corporate affairs Mr Vincent Seruma, alluding that the Airtel deal is not a buyout, said before the conclusion of a business sale, all outstanding tax obligations must be cleared.
UCC figures show K2, one of eight operators in Uganda, has 100,000 customers.
South Africa’s MTN has the largest market share with 11 million subscribers followed by India’s Airtel with 7.5 million users. Uganda Telecom has two million customers, Africell one million subscribers and 1.5 million users are shared by K2, Smile, Roke and Liquid telecoms.