MTN Uganda optimistic over UTL ruling

May 5, 2011 • Mobile and Telecoms

MTN Uganda hails ruling (Image source: file photo)

Analysts are optimistic that the ruling of Uganda’s Commercial Court, which ordered Uganda Telecom (UTL) to pay MTN Ushs5 billion (approx US$ 2 billion) as part of payment owed the South African-based telecom giant for fees during 2008-2009, could be a watershed moment for the sector. They hope the ruling will help establish credibility and accountability between companies.

“We are definitely hopeful that this kind of situation will not repeat itself, knowing that there are consequences to poor behavior,” said Kembale Jones, an African telecom expert based in Kampala.

He believes that companies will be “more vigilant to ensure all deals are properly handled from now on.”

Earlier in the week, the head of the Commercial Court Justice Geoffrey Kiryabwire ruled that UTL must pay an initial $1.5 million fee with interest to MTN as well as another 19 percent interest until the payment is made in full.

Damages were also awarded to MTN Uganda of approximately $44,000.

According to an MTN Uganda official, who was not authorized to speak to the media, the ruling is “vindication” of their case.

“We believe that this is going to hold companies accountable to other companies and we definitely feel as though we are in the right for this situation,” said the company official.

The ruling comes after MTN issued a public notice against UTL last month over a Ushs20 billion debt that had been accumulated in interconnect fees from subscribers but not remitted to MTN as part of the two companies’ agreements.

MTN sued for Ushs3.48b ($1.5m) and claimed interest at a rate of 19% per annum, which as of October 2008 stood at Ushs1.5b ($652,000). MTN also sought general damages of Ushs500million.

UTL in its defense said it did not owe any money as the traffic was deemed to be international traffic charged at a different rate.

By Staff

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