The Independent Uganda: You get the Truth we Pay the Price
The study recommended formal investigation into potential abuses of dominance and other anticompetitive market conduct. Among others, it recommended fines of up to 10 percent of the telecoms’ annual turnover and issuance of an order to stop the unfair competition.
It is not the first time MTN and other telecoms are facing such accusations and charges of unfair competition.
In his 2016/17 budget speech, President Museveni claimed that the telecom companies were under declaring and as a result evading an estimated $ 400 million per year in taxes.
He said this was the reason government was acquiring equipment to trace all telephone calls. The Independent had a month earlier reported that the technology being acquired was an Intelligent Network Monitoring/verification System (INMS) estimated to cost between $20-30 million (Shs. 66 billion–99 billion). This would enable the country monitor the volume and billing of voice and data traffic of telecoms.
Since telecoms started operating, they had been doing what is called self-declaration to the sector regulator.
As such, UCC and the Uganda Revenue Authority (URA) have been levying fees and taxes based on what the telecoms say they earned.
UCC, for example, collects an annual levy on telecoms gross revenue of 2 percent. The levy constituted 27% of UCC’s projected revenues in the financial year 2014/2015. And UCC is required to remit 1% of this levy to the Consolidated Fund.
In the 2015 report, the Auditor General, John Muwanga, raised concerns about the regulator’s reliance on the operators audited financial statements to raise invoices of the 2% levy on the revenue. The Auditor General noted that a review of the revenue collection system revealed that the UCC has not yet built capacity to independently verify the revenue figures reflected in the operators audited financial statements to counter the likelihood of audit risk/ or collusion.
“As such, there is a risk of under collecting revenue for the Commission in the circumstance,” the Auditor General’s report said.
In his audit, the AG noted that the regulator said that procurement of a traffic monitoring system is on-going and will enable monitoring of telecom traffic and verification of revenues submitted by operators. In reaction, UCC officials said they were working on procuring a system that would address this.
The Independent understands that after several years of searching, government had finally handed the deal to a company called Global Voice. The Independent could not readily establish the results of the company’s efforts. Critics said it was largely unlikely that that company would put an end to under declaring by telecoms since they always deploy sophisticated technology.
Apart from this, on Nov.6, High Court Judge Henry Peter Adonyo found MTN Uganda guilty of aggressively taking anti-competitive practices against EzeeMoney, which was awarded damages of Ush2.3 billion. MTN appealed the ruling.
The court battle between the two started months after EzeeMoney started operations in 2013. In order to operate, EzeeMoney entered an agent network contract with MTN that allowed it to work with the telecom’s network of agents totaling about 15,000 agents. Months down the road, MTN terminated the same.
As such, EzeeMoney sued MTN for unfairly denying them the ability to connect to its network, withdrawing its line called E1, and subjecting its agents to harassment, and denying them services.
EzeeMoney noted that MTN Uganda breached the statutory duty when they denied a platform offered by Yo! Uganda Ltd and agency services contrary to the Communications Act.
The Communications Act prohibits any activities which have or are intended to have the effect of unfairly preventing, restricting or distorting competition in relation to any business activity relating to communication services.
On their part, MTN claimed that the cited provisions of the Communications Act did not prohibit competition as such but unfair competition.
MTN argued that the breach should have been committed by a licenced entity against a similarly licensed entity with both entities being engaged in the provision of telecommunications, data, radio and postal communications including broadcasting as defined by the cited section. EzeeMoney was not licenced to that effect.
It also emerged that EzeeMoney had entered agreements with several agents some of whom already had open contracts with MTN.
However, in court, it emerged that MTN forced the same agents into exclusive agreements. The agents, according to the judgement, had their contracts with MTN terminated if they continued to operate EzeeMoney services.
When agents went to inquire why their services were terminated, they were made to apologise for having signed up with EzeeMoney.
Justice Abonyo ruled that MTN acted outside the law when it signed exclusive lopsided agreements and that the method of enforcing the agreements was coercive.
Away from the unfair practices, Uganda Revenue Authority (URA) has been battling MTN for liability to pay taxes amounting to $90 million (Approx.Shs33 billion), which accrued from under-declaration of earnings on the lucrative Mobile Money, and information technology services provided to MTN Uganda between December 2015 and February 2016 by its mother company MTN Sea Shared Services (MTN SSS) Ltd.
The petition also raises concerns that individuals who have taken bold moves against MTN, have had threats made to their life and have had to get protection from security forces. This is a reference to the events of 2014 when President Museveni deployed his elite Presidential Guard Brigade forces to guard Richard Mwami, a former head of MTN’s Mobile Money department, after it emerged that there were attempts to use assassins to silence him. Mwami had just fallen out with MTN.
Mwami told The Independent that on the night of November 26, 2014, three hooded attackers jumped the fence of his home in the upmarket Muyenga neighbourhood with intention to kill him. Allegedly, one of the attackers, armed with a gun, climbed up to the balcony of Mwami’s bedroom on the second floor.
Mwami said all this happened after he had uncovered a racked in which MTN created `fictitious’ money on its Mobile Money platform and transacted in it on its MTN Mobile Money shops. At the time, the telecom was also suing Mwami and others for defrauding it of billions in Mobile Money transactions. Mwami won the case but the others were found guilty.
