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MTN faces more problems in Uganda as authorities query its sales figures

By Reuters | Feb 20th 2019 | 3 min read
By Reuters | February 20th 2019
Deported MTN Uganda’s Chief Executive Wim Vanhelleputte. (Photo/File)

Uganda accused the country’s biggest telecoms operator, MTN Uganda, on Tuesday of underdeclaring its sales and causing public revenue losses, in a further souring of relations with the South African-owned company.

Uganda deported MTN Uganda’s Chief Executive Wim Vanhelleputte last week, the fourth MTN official to be expelled from the East African country in less than a month on accusations of compromising national security.

The company is a unit of South African telecoms giant MTN Group, which has also had problems in Nigeria where the central bank last year accused it of repatriating $8 billion without the correct paperwork. The row was later resolved after the company paid a token settlement.

MTN Uganda has over 10 million subscribers and competes chiefly with the local unit of India’s Bharti Airtel.

Relations between the government and the company have been tested over the past year by a series of setbacks including a security raid on the company’s data centre, delayed renewal of its operating license and the expulsions of its executives.

The company has also been under political pressure to list its shares on the local bourse to facilitate domestic ownership of the company and ensure more of the money it earns stays in the country.

Government spokesman Ofwono Opondo said scrutiny of MTN came after the government acquired the capacity to monitor telecom firms’ transactions for tax compliance and reporting purposes.

“It is as a result of that technical capacity that MTN and its officials have run afoul,” he said.

“They have been found that in some instances they have not been making full declarations of transactions which constitutes undermining Uganda’s economy.”

Ugandan President Yoweri Museveni has repeatedly accused telecom firms in the country of cheating taxes by underreporting the volume of their calls and data sales, but has not named any companies.

MTN Uganda’s spokeswoman Justina Ntabgoba said the company had not been given any details of the alleged underreporting of transactions.

“We have not gotten any official communication, so we don’t have a response. Once we receive an official communication then we can respond,” she said.

Opondo also accused the expelled MTN officials of compromising Uganda’s national security by “providing backend access to unauthorised persons for whatever reasons. That’s what these officials of MTN did, opening backend for Uganda’s data system to other unauthorised persons.”

He said the reasons were likely espionage or economic sabotage and that the motivation was still under investigation.

MTN’s Ntabgoba declined to comment on the accusations, saying only that the government had not informed the company of the reasons for the executives’ deportations.

MTN has been operating in Uganda since 1998 when it secured a 20-year operating license that expired last October.

In 2017 it began a process to obtain a 10-year extension but that has dragged on amid disagreements over the size of the fees to be paid for the extension and other issues.

The Uganda business contributes about 4 percent of MTN Group’s earnings before interest, depreciation and amortisation.

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