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Most adult Ugandans, especially those who grew up in urban areas, have very fond memories of Uganda Telecom, popularly known as Uganda Telecom.
Yes, memories, because despite it at one time being the only phone services provider in the country, for much of the 1970s to the mid-90s, before competition came into play, the company has been reduced practically to its bare bones, to the extent that for many of Ugandans born after 2000, the telco is almost non-existent in their world.
The government-owned Uganda Telecom evolved from the earlier East African Post & Telecom Corporation in the 1970s, and its successor company⏤ the Uganda Post and Telecom Corporation (UPTCL) in the 1980s and 1990s.
Following the unbundling of UPTCL in 1998 into three companies- PostBank Uganda, Uganda Post Limited and Uganda Telecom, the telco was incorporated as a Public Limited Liability Company, fully owned by the government of Uganda.
In 2007 LAP GreenN, a Libyan government-owned investment company, through one of its investment vehicles, UCom, acquired 69% of its shares, leaving the Government of Uganda with the remaining 31% of shares.
Following the 2011 overthrow and killing of the Libyan President, Col Muammar al-Qaddafi, and the subsequent political vacuum in Libya, coupled with the government of Uganda’s failure to recapitalise the company while continuing to use and not paying for services, Uganda Telecom started losing market share and subsequently, sank into a financial crisis.
This spiral down was precipitated by some players in the Government of Uganda who frustrated efforts by the Libyans to reinvest and restructure the company. Increased investment by the Libyans, would have required the Ugandan government to put in more money, which it was not willing to. Letting the Libyans go it alone, would necessitate a capital recall, leading to Uganda ceding more shareholding in the telco. The frustrated Libyans decided to cut off all funding as well as direct all its directors on the Board to resign.
Mr. Ali Amir, the then-Libyan Managing Director also resigned.
What followed was a free-fall.
Persistent bad governance, poor cashflows and an obsolete network caused by years of underinvestment, exacerbated by government officials meddling in the running of the company, accelerated the telco’s challenges. Liabilities— mainly supplier debts and statutory obligations, choked the business. By 2017, the company’s liabilities had reached about UGX700 billion, compared to UGX148 billion in assets.
Faced with threats of liquidation by creditors and a persistent failure to meet its daily financial obligations, and deserted by customers, the telco was declared insolvent and put under administration in April 2017.
Mr. Twebaze Bemanya then, the Registrar General of the Uganda Registration Services Bureau (URSB), the official receiver, was appointed as the first administrator.
Clause 4 (g) of the 22nd May 2017 Administration Deed among others gave powers to the Administrator to among others look for an investor.
The then administrator started the process of looking for a buyer for the beleaguered telco, a process that quickly degenerated into an open fight between Mr. Bemanya and Hon Evelyn Anite, the Minister of State for Privatisation & Investment under whose docket the shareholding of Uganda Telecom fell.
An Anite-preferred Mauritius Telecom, which had sent in a bid to buy 69% of the shares owned by the Libyans, for USD45 million with a further pledge to infuse at least USD100 million was passed over for a Teleology Holdings Ltd, a Nigerian company which had offered to pay USD71 million. On winning the bid, Teleology was required to pay a non-refundable USD7 million within a month of receiving the offer and to pay up the balance, within two months.
By April 2019 Teleology had failed to raise the required amount, and they were booted.
Following the botched Teleology deal, Ruth Sebatindira, a lawyer and Partner at Ligomarc Advocates was appointed as the new Administrator on 2nd January 2020 by the High Court.
On the 23rd February 2022, the Administrator, through an Asset Sale and Purchase Agreement (APA) sold the assets of Uganda Telecom to Uganda Telecommunications Corporation Limited (UTCL)⏤ a newly formed government entity at a consideration of UGX314.5 billion.
This followed an offer by UTCL to Uganda Telecom.
After the sale, all liabilities would remain with Uganda Telecom and the proceeds from the sale were to be used to partly settle part of the liabilities.
Before the sale, Uganda Telecom’s liabilities had risen to UGX972 billion, versus UGX250 billion in assets.
To date, UTCL is yet to finish paying for the Uganda Telecom assets it acquired.
UTCL was formed on the 08th of April 2021 and is owned 60% by the Ministry of Finance, Planning and Economic Development and 40% by the Ministry of ICT & National Guidance (MoICT & NG).
In September 2022, a new Board for UTCL was inaugurated by Hon Evelyn Anite that is Chaired by Dr. Grace Sekakubo, the Head of Centetech, the ICT arm of Centenary Bank. The other Board members are Mr. Jimmy Adiga the former CEO of BRAC, Mr Tom Sekakuto a former technician with Uganda Posts and Telecommunications Corporation, Ms. Maximilia Byenkya a lawyer, Ms Agnes Ojambo an Auditor, Ramathan Ggoobi, the Permanent Secretary and Secretary to the Treasury (PSST), as well as Ms. Aminah Zawedde, the Permanent Secretary of the Ministry of ICT and National Guidance.
Following the acquisition of Uganda Telecom assets, UTCL also unveiled a new trading brand, UTel, with a promise to reinvigorate the market. During a November 2022 event to unveil the new trading brand, Hon. Anite said that the government had set aside some UGX300 billion to reinvest in the telco. This was however far below the USD230 million (UGX874.4 billion) that an earlier study had found, is what was needed to revamp the company to a point where it stood a chance against the already tight duopoly in the market.
The Rowad Capital factor in the formation of UTCL
If you, like us were wondering why the government needed to move away from Uganda Telecom, a company it already technically owned to form another UTCL, it also owned, we now have the answer.
Available documents show that behind the formation of UTCL and all the claims of new government investment in the telco, was a Presidential order to create an encumbrance-free company, for the purposes of selling a majority stake to a new investor⏤ Rowad Capital Commercial (RCC), a little-known investor from the Middle East.
According to a 29th March 2021 letter by President Museveni to the Hon. Matia Kasaija the Finance Minister and Hon. Evelyn Anite, her deputy, the President refers to a Friday 12th March 2021 meeting at Statehouse and a subsequent Presidential directive that a new government-owned telco be formed, in which the finance ministry would own 60% and the MoICT 40%. This new company would then buy the assets of Uganda Telecom. The money paid for the acquisition of Uganda Telecom’s assets and business would be used to pay for some of Uganda Telecom’s liabilities, according to the President’s letter.
The President further directed that soon after completing this deal, the finance ministry would offer its 60% shareholding to Rowad Capital Commercial (RCC).
“The Ministry of Finance, Planning & Economic Development should make a formal offer to Rowad Capital Commercial (RCC) to jointly invest in the New National Telecommunications Company with 60% of the ownership going to RCC and 40% shareholding for the Government. In addition to the Government’s equity contribution that should be ascertained, RCC is expected to commit to avail a minimum of USD 25 Million within 90 days as working capital from the offer date and a minimum of USD 200 Million for network revamp in the New National Telecommunications Company during the first 3 (three) years,” the President wrote.
The President in his letter, also references an earlier cabinet meeting on 30th April 2018 that had blessed the same transaction.
How real is Rowad Capital Commercial?
At this stage, if you are wondering who Rowad Capital Commercial LLC (RCC) is and why it wields so much power and favour from the President, you are not alone.
Before this whole bid to take over UTCL, Rowad Capital Commercial LLC (RCC) and its Founder & CEO, Mr Chaher Al Taki were unheard of.
Almost all the information about Chaher Al Taki and his company Rowad Capital Commercial LLC (RCC) is either on the company’s website or on Ugandan news sites and only in reference to the UTCL deal.
Chaher Al Taki, according to the Rowad Capital Commercial LCC website is described as a businessman who has been involved in business for more than 20 years in large transactions in the Middle East and Africa.
The Rowad website also describes Mr Chaher as a businessman who has attained, “a notable degree of success, translated into both high rates of return for his clients and shareholders, as well significant growth for his enterprises” with “vast experience in real estate and contracting in the Middle East”.
He was born in Damascus, Syria in 1976, and later relocated to Saudi Arabia during his childhood and later on to the United Arab Emirates after completion of his studies where he started his professional growth.
The website goes on to say that since 2002, Chaher Al Taki has been a key player in the residential, hospitality and infrastructure sectors in the United Arab Emirates and the Kingdom of Saudi Arabia as owner and Managing Partner of major companies in the region.
In 2007, the website says, Mr. Chaher founded Ruwad Civil Construction, a company that has executed some major real estate projects in the Middle East, especially with a major footprint in the Kingdom of Saudi Arabia.
However, in 2016, Chaher Al Taki sold his shares in Ruwad Civil Construction to a Sheikh Salah Al-Belawi, another Saudi businessman and went on to found Rowad Capital Commercial LLC (RCC)
Rowad Capital Commercial Brokers LLC in 2016. in Dubai, a company that the website says deals in social economic, infrastructure, power generation and oil and gas projects as well as special vehicles manufacturing, EPC and financing services.
Chaher Al Taki, the website says, is also involved in other business lines related to project management, advertising and telecommunications through several sister companies under the RCC group.
The RCC Group includes Rowad Capital Commercial, Sky Light Advertising, Sea Wheat for strategic project management, and SHG Developments. However, most of these companies have scanty information online, except for Rowad Capital Commercial LLC (RCC).
Some of the services these companies offer services such as government relations, international financial transactions, commercial brokerage, and advising clients on the export of industrial capacity, and infrastructure development.
“RCC was created based on the previous experience and contacts networks of Mr Chaher in UAE and Saudi Arabia and it has shown an exponential growth in terms of project awards value, revenues and profit,” the company profile reads in part.
An independent analysis by CEO East Africa Magazine shows some glaring gaps in the company’s credentials, gaps that raise serious questions about its ability to meet its end of the bargain in the UTCL deal- especially the raising of over USD200 million to invest in the telco.
For example, according to information available to us, ‘Rowad Capital Commercial Broker L.L.C’ is registered as a single person. It is registered as a commercial broker, according to the Rowad Company Business License details obtained from the United Arab Emirates online National Economic Register.
The company was incorporated on November 29th, 2016 and its business registration license is due to expire on November 28th, 2024.
The company’s CBLS Federal Reservation number is 10948860 and the Business License local number is 771321 which all can be used in searching about the company details.
The company is registered under the Economic Department of Economy and Tourism.
The company’s full address is at Deira Hor Al Anz East, a locality in Dubai, which is different from the address mentioned on the company website in Downtown Burj Khalifa, Boulevard Plaza Tower 1, 9th floor, P.O. Box 340733 also in Dubai, United Arab Emirates.
The Rowad website also has a lot lacking.
For instance, the website doesn’t show any profiles of its board and management executive profiles; there are no annual performance reports, and there isn’t any financial result report to support Rowad’s claims of a high turnover in billions of dollars.
The website lacks original project images, and instead uses commercially available stock images from the internet and has some dead links.
For the telecom business in particular, Rowad shows it has in particular worked in four African countries including Nigeria, South Sudan, Chad and Sudan. It also says that Rowad has executed a Network launch in South Sudan, a National Data Development Plan in Nigeria and a new GSM network planning and rollout support, as well as tower network acquisition in Sudan.
However, details of these projects remain scanty with no mention of the year they were contracted and executed, or even the key partners involved.
The CEO Magazine’s efforts to reach Mr Chaher through an email provided on the company website are yet to bear any fruit.
The race for UTCL heats up⏤ Rowad faces intense scrutiny, Madagascar’s AXIAN Group joins the race
Following the President’s directive, the Ministry of Finance asked the Financial Intelligence Authority (FIA) to do due diligence on Rowad. The report was completed on 21/02/2022 and handed over to the Ministry.
Mr Samuel Wandera Were, the Financial Intelligence Authority (FIA) Executive Director declined to tell CEO East Africa Magazine the details of the report, saying the report is highly confidential and can only be accessed through the Ministry of Finance.
But whatever the contents of the report were, it seems they were damaging to the Rowad bid, prompting Moses Kantu, the Chairperson of Rowad to run back to the President for protection.
In an internal Statehouse memo dated 14th July 2022, by Lt. Gen. Proscovia Nalweyiso, the Special Presidential Assistant to the Special Presidential Assistant for Economic Affairs, Dr. Charity Mwebesa, Moses Kantu, the Rowad Chairman in a 2nd June 2022 letter, is said to have written to the President requesting to meet him over alleged “impediments and unfounded technicalities deterring the potential investors”.
Nalweyiso, in the memo, goes on to tell Dr. Charity Mwebesa, that “His Excellency directed that find out and brief the President, as to why this project has delayed and report back in two weeks”.
Intense scrutiny on Rowad aside, a new investor, had cropped up in the mix.
According to correspondences available to CEO East Africa Magazine, on 5th April 2022 investment Minister Anite, received an expression of interest to invest in UTCL from Mr. Hassanein Hiridjee, the CEO and Founder of AXIAN Group.
Who is AXIAN Group?
Unlike Rowad, AXIAN boasted of a more solid reputation.
AXIAN is a pan-African Group with interests in energy, real estate, open innovation, financial services & telecoms. The telco arm has AXIAN Telcom, TowerCo of Africa ( a tower company) and STELLAR-iX, a pan-African data hosting and infrastructure management that among others runs multi-carrier connectivity and data centres.
AXIAN Telecom on the other hand has operations in Tanzania, Madagascar, Togo, Uganda, Democratic Republic of the Congo, Senegal, Réunion, Mayotte, and the Comoros.
TowerCo of Africa, operates telecom tower infrastructure in Madagascar, Uganda, the DRC and Tanzania. TowerCo of Africa last year acquired 90% of Ubuntu Towers in Uganda.
Following the expression of interest by AXIAN, on 7th April 2022, Ms. Anite wrote to the UTCL Board and the Administrator, Uganda Telecom informing them of this interest and introducing Hassanein Hiridjee to them. She asked that AXIAN be granted access to the company facilities to be able to do some due diligence.
On 4th May 2022, Anite wrote to AXIAN’s Hassanein, informing him that this access had been granted. The letter was copied to the Minister and PS of the Finance Ministry as well as the PS of MoICT and the Uganda Telecom Administrator.
What followed was an episode of push and pull precipitated by the failure of Rowad to raise the required initial investment, prompting the Rowad Capital Group Chief Executive, Mr Chaher Al Taki to pay a visit to President Museveni on October 16th, 2023 at State House Entebbe.
At the meeting, Mr. Chaher reportedly informed Museveni of his group’s interest in investing in various sectors which included among others oil and gas as well as telecommunications.
In attendance were Minister of Finance, Matia Kasaija and Investment Minister, Anite. Others in attendance included the Chairperson of Tumaini African Knowledge Center (TAKC), Ambassador Rosa Malango and TAKC board member, Ms. Rose Birungi.
On the same day that the Rowad team was meeting President Museveni (October 16th, 2023) AXIAN wrote to the State Minister of Finance for Investment and Privatisation, Hon. Evelyne Anite, asking for an audience with President Museveni.
In the letter, AXIAN indicated what it had on the offer including its commitment in terms of capital readiness, indicating, it was ready to make the initial investment of USD 25 million and commit to invest an additional USD 200 million in the next five years.
It wasn’t until October 19th 2022 that Minister Anite wrote back to AXIAN officials, acknowledging receipt of their letter concerning AXIAN’s interest in Uganda Telecom.
Anite in her response to AXIAN noted that the government had initiated a competitive participation process in the Uganda Telecom project to ensure transparency in the selection of the ideal partner.
“I would encourage AXIAN to closely monitor the upcoming official advertisement so that it can submit a comprehensive proposal when the process is announced,” Anite wrote.
Unknown to AXIAN, behind the alleged competitive and transparent bidding, the President was moving the world to ensure Rowad gets the Uganda Telecom deal.
In a 22nd December 2023 letter to Hon. Dr. Chris Baryomunsi, the Minister of Information, Communications Technology and National Guidance, the President directed him to hand over Rowad 60% of Uganda Telecom immediately and with almost no conditions.
“You should accept that Rowad Capital acquires 60% shares straight away. The details of who put in more money can be settled along the way. They should have majority on the board. They should also be given the management of the ICT backbone,” President Museveni ordered.
On the same day (22nd December 2023) the government of Uganda indeed entered into an agreement with Rowad Capital Commercial LLC (RCC) for the acquisition of 60% of UTCL, together with the Government’s digital infrastructure, especially the National Backbone Infrastructure (NBI) and the National Data Centre. The deal is also being sweetened to include an explicit Government Support Agreement that guarantees the new UTCL all government telco and data business.
Even if the deal is still facing some internal resistance, especially from the National Information Technology Authority – Uganda (NITA-U) who have been running the NBI as well as some misgivings by key officials at the Ministry of Finance and MoICT, the deal is fait accompli, bulldozed through by the President.
What remains to be seen is whether Rowad Capital can prove the President right and critics wrong⏤ given the very many gaps in their script.