After the apparent failure to secure outright substantial market for five years now, Africell a Lebanese telecommunication company could soon close shop in Uganda.
TrumpetNews has exclusively learnt that Africell has long outstanding debts on its balance sheet which accumulated to the tune of $10 million (over shs 36 billion).
The said amount was accrued from operational and other running costs. However, Africell has not been able to recoup some of this money from service provision in a congested market dominated by MTN and Airtel.
Africell reportedly inherited 600,000 customers from Orange but the number has since dropped to a paltry 250,000 customers mostly on the data service while voice remains largely untapped.
To keep service up, the underfunded telecom has been using EATON Towers Uganda as its network service provider for network masts but failed to clear the outstanding debt which compelled EATON to switch off some of its masts upcountry over the weekend.
“You must know that masts/ towers use fuel, they are serviced and also guarded. These are costs EATON meets while hosting their clients like Africell. There is only little they can do if the client isnt paying on time,” said a source at Africell.
Orange Uganda which sold its stake to Africell in 2014 had earlier sold 180 transmission masts to Eaton Towers Ltd, leaving the company with few core technical infrastructure units, and its these masts are the ones Africell has been using over the years.
Sensing that its market market share both in voice and broadband has been nose-diving, Africell management resolved not to settle huge outstanding debts to keep afloat leaving the balance sheet in negatives.
As a result, internet which has been its major product slowed down compelling its clients to seek solace in other competitors (Airtel and MTN).
TrumpetNews has further learnt that Africell management tried to engage EATON over the outstanding debt but their request fell on deaf ears as EATON was determined to switch the telecom off countrywide.
“Africell sought the intervention of Uganda Communications Commission (UCC) which has since initiated negotiations,” a source said.
What is however surprising is that as negotiations are still on going, Africell hasn’t expressed any willingness to at least pay half of the contested debt.
UCC executive director Godffrey Mutabazi when contacted said the law mandates UCC as a regulator to intervene in such scenarios.
“We are trying to find out what could be the problem. May be the tariffs are high,” he said before ending the call.
Edgar Karamagi, Africell spokesperson told this website that he needed to first consult with the relevant teams to have a clear position before he comments.
But observers say, mediating for a company that is financially bedridden like Africell is very dangerous as it may cause more harm for the industry.
“Such a company that can’t even raise $2m dollars to pay off creditors means its bankrupt. The only solution is to let go otherwise it can file for bankruptcy and the task will be on UCC to compensate the creditor- EATON Towers.
This development means Africell which has for long invested in media campaigns shows the stark reality of running business without a clear strategy, a fact analysts point to as Africell’s biggest weakness.
“The Lebanese don’t listen to the local staff who understand the market. Their duplicated ideas from Beirut which are then forced onto the markets like Uganda aren’t in touch with local demands” said an insider.
