Uganda Telecom embarks on “business turnaround” amid reports of possible takeover
Uganda’s telecoms sector has been some sort of content factory over the last few weeks, with reports and denials of mergers, lawsuits, as well as confirmation of one major takeover.
With Bharti Airtel last week confirming acquisition of Warid Telecom, the market conditions and chances of survival of the “smaller” players have been the subject of intense debate. Reports yesterday suggested that MTN Uganda may be considering “local acquisitions”, the target being generally believed to be Uganda Telecom.
For their part, Uganda Telecom have now “embarked on a Business Transformation and Turnaround Strategy” to affirm their “position as Uganda’s largest fixed line network and only indigenous telecommunications company”, according to a press statement released earlier this week.
The firm has struggled to streamline operations since the UN, in 2011, under resolution 1973 froze Libya’s global assets – including Uganda Telecom – as it sought to cut financing to the Libyan regime that was determined to suppress a civil uprising challenging then president Gaddafi’s 40-year hold on power.
The sanction crippled the operations of a number of investments suffocating channels of funding to run such company’s operations.
But mid last year, majority shareholder, LAN GreenN appointed David Holliday as the firm’s new Managing Director to help implement LAP GreenN’s turnaround of UTL.
Since the appointment of Mr. Holliday UTL has already seen an improvement in business performance including a significant reversal of the previous 3-year EBITDA decline as well as the introduction of international standards across the organisation. The second half of 2012 saw a significant improvement in performance with H2 revenues and EBITDA up by 9% and 46% respectively compared to H1. The improved financial performance of the company was a result of increasing subscriber numbers by 17% from 31st June to 31st December 2012 and improving the cost base towards levels in line with international best practice, leading to a 54% EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) improvement compared to FY2011.
“The turnaround strategy has involved benchmarking the company against international standards of ethics, corporate governance and accounting, and enhancing operational efficiency,” said David Holliday in the press statement.
“We have embarked upon a multitude of changes to the way that UTL operates. We are investing in new equipment and automation which, combined with new processes, will create impr
oved efficiency in the network countrywide. We will also be rolling out new products in the fixed line, mobile and internet lines of the business in coming weeks,” he added.
The part of the turnaround strategy that focuses on the fixed-line side of the business includes an upgrade to UTL’s ISP and ADSL services, delivering much faster internet speeds into homes and office premises countrywide to meet rising demand.
“A major part of our business transformation has been to forge a new department focusing on our fixed line business to deliver voice and data throughout the 64 telephone exchanges that UTL covers nationwide, and we believe that all our customers will soon be proclaiming a major difference in their experience with Uganda Telecom,” Holliday said.
Another part of the turnaround strategy focusses on Mobile network enhancements and a state-of-the-art mobile money platform.
Other areas of focus include greater accessibility for customers to UTL with the installation of a brand new Ushs675 million customer service system which will serve UTL’s customers in five languages.
“This is an investment in improving the customer experience and interaction with Uganda Telecom. As Uganda’s only indigenous telecommunications network we have a duty to reach as many Ugandans as possible across the country in the languages they are comfortable with.”
Part of the turnaround plans involves a restructuring of the company to create more efficiency through better work practices and automation. This has resulted in a reduction in the staff numbers required.
“[Part of the transformation] has meant changes in UTL which on the one hand has led to a reduction of job functions and positions, which was unveiled to those staff who it has affected today.”
“These changes need to be seen in context, for example in the last 4 months we have added 400 more ‘blue-warrior’ direct sales-agents and four new regional distributors appointed in the last month will create hundreds more direct and indirect jobs across Uganda and of course over time we expect to see the improvements filtering through to all our customers and stakeholders.”
“We are going to focus on making a Ugandan company truly world class in effectiveness and efficiency, and the benefits will be felt by our customers and shareholders alike” Holliday added.
