MTN Uganda to pay $100m in taxes, list 20pc shares for long-term licence
Saturday March 14 2020
Telecom giant MTN Uganda will list at least 20 per cent of its shares on the Uganda Securities Exchange, and pay $100 million in blanket taxes as part of the conditions for it to be issued with a long term licence.
This marks the end of a three-year tussle with the government, and finally securing the future of MTN operations in Uganda.
The agreement to pay the $100 million is good news for the Uganda Revenue Authority as MTN has agreed to pay in just two instalments of $50 million each, with the first payment expected as early as March 15, and the second in April or before the end of the financial year.
According to sources, the final agreement was reached at a meeting on Wednesday at the Ministry of ICT and National Guidance attended by officials from the regulator Uganda Communications Commission, the Ministry of Finance and MTN executives.
“It is true that MTN agreed to pay the $100 million in return for a licence for 14 years. As government, we had wanted to give them 10 years but they explained that they have to invest in infrastructure upgrades and that their investment plan will see them injecting an extra $260 million over the period so we agreed on 14 years,” State Minister for ICT Peter Ogwang said on Friday.
“They also agreed to start the process of public listing which requires them to list at least 20 per cent of the company shares within the first two years of licensing,” a source told The EastAfrican.
MTN will get a long term National Telecom Operator License for which the company will be required to guarantee 100 per cent geographical coverage of the country with a minimum of 4mphs internet speeds in rural areas and 8Mphs in urban areas. In MTN’s category is India’s Bharti Airtel and the government-owned UTL.
Other operators will have to settle for other licence categories under the new broadband policy.
The new licensing framework which comes into force on June 30, seeks to improve the quality of telecommunication services and boost investment in the sector for both existing and new telecoms operators.
The other licence categories are: National Public Service Provider, Regional Public Service Provider, National Public Infrastructure Provider and Regional Public Infrastructure Provider.
Fees for the National Telecom Operator licence is subject to negotiation along the annual minimum value, renewal or migration and fees computation.
The national public service provider licence holder will pay a minimum of $300,000 per annum and 1.23 per cent of prior total audited gross revenue for renewal or migration. The licence fee will be assessed on the “basis of total gross revenues of last year ended audited accounts, multiplied by licence tenure.”
The national public infrastructure provider licence holder will pay $300,000 in fees, liable to a licence value of 1.23 per cent of prior total audited gross revenue, offer 100 per cent geographical cover and 20 per cent local ownership on licensing or renewal for a period of 15 years.
The regional public service provider on the other hand will pay $50,000 in fees, liable to a licence value of 1.23 per cent of prior total audited gross revenue, offer coverage as per the licensed zone. The licence renewal will be based on the total gross revenue of last year ended audited accounts multiplied by licence tenure for a period of 15 years.
Until this year, Airtel and Africell have been operating both NPSP and NPIP licences, but under the new structure, they are required to operate one of the two.