Mauritian firm gets nod to buy Uganda Telecom Ltd
2 months ago, 21 July 11:48
Mauritius Telecom has emerged as the preferred company to buy a majority stake in troubled Uganda Telecom Ltd, according to a leaked Cabinet memo.
The seven-page memo dated last month, says that out of the six firms that put in bids to buy majority stake in UTL, the Mauritian telco was cleared by the Financial Intelligence Authority (FIA) “as the only credible and financially stable company among the evaluated companies.”
The Minister of Finance tabled the memo to his colleagues, showing that Mauritius Telecom offered $45 million “as consideration for assets,” capital investment of $100 million over a period of three years and a 69-31 per cent shareholding structure between itself and the government.
“According to the FIA report, the best option available is Mauritius Telecom, which has offered $45 million,” the memo reads.
The tone of the memo gives the sense that only formalities remain for the Mauritian telco to take over UTL.
“Colleagues, in light of where we are, and with a view to quickly conclude this matter, we propose as follows: The administrator awards and finalises with Mauritius Telecom as the only credible potential partner with the government as recommended by the Financial Intelligence Authority,” the minister writes, stating this position as the first option in the sale of the majority stake.
Offer below market value
However, according to the memo, a copy of which The EastAfrican has obtained, the UTL administrator Bemanya Twebaze was concerned that Mauritius Telecom’s offer is below the assessed market value of UTL, which is currently set at $80 million.
The offer is way below the $70 million made for consideration of assets, $285 million capital investment over a three-year period and a shareholding split of 62-38 per cent, tabled by Hamilton Telecom.
“Seeing as the administrator’s duty is to get the best return for the creditors, he proposes to select the best three potential partners and engage them further with a view to revising their offer upwards. A final offer will be made to a partner with the highest offer,” the memo says.
This position is premised on the Insolvency Act, which gives power to the administrator to get the highest amount of money for the creditors as part of his duty in returning the company to better financial health.
However, it is understood that in an April 30 Cabinet meeting, President Yoweri Museveni was rooting for Safaricom, which had shown interest in partnering with another bidder, Afrinet Communications Ltd, to buy the Ugandan telco.
But, based on the latest Cabinet update on the process of sourcing a strategic partner to invest in UTL, the Kenyan telecom seems to have “since withdrawn its interest.”
As a result of Safaricom’s withdrawal, Afrinet Communications Ltd, which had offered the second best purchase price of $67 million, also confirmed to Finance Minister Matia Kasaija that they had withdrawn their participation.
Other firms looking to take over UTL include Teleology Holdings, which offers a purchase price of $60.5 million, capital investment of $230 million over three years, and a 67-33 per cent shareholding structure; Neubacher Montage LLP offers ...
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