MTN Uganda to pay $100 Million in Taxes before Issuance of Licence

As part of the conditions for it to be issued with a long-term licence, Telecom giant MTN Uganda will list at least 20% of its shares on the Uganda Securities Exchange, and pay $100 million in blanket taxes. This will mark the end of a three-year tussle with the government, and finally secure the future of MTN operations in Uganda.

The agreement to pay $100 million in taxes is good news for the Uganda Revenue Authority as MTN has agreed to pay the amount in two instalments of $50 million each, with the first payment expected as early as March 15, and the second in April or before the end of the financial year.

According to sources, the final agreement was reached at a meeting on Wednesday at the Ministry of ICT and National Guidance attended by officials from the regulator Uganda Communications Commission, the Ministry of Finance and MTN executives.

“It is true that MTN agreed to pay the $100 million in return for a licence for 14 years. As government, we had wanted to give them 10 years but they explained that they have to invest in infrastructure upgrades and that their investment plan will see them injecting an extra $260 million over the period so we agreed on 14 years,” State Minister for ICT Peter Ogwang said on Friday.

According to a source, MTN has also agreed to start the process of public listing, a requirement that will see them listing at least 20% of the company shares within the first two years of licensing.

Telecommunications Licensing in Uganda

MTN will get a long term National Telecom Operator License for which the company will be required to guarantee 100% geographical coverage of the country with a minimum of 4mphs internet speeds in rural areas and 8mphs in urban areas. In MTN’s category is India’s Bharti Airtel and the government-owned UTL. Other operators will have to settle for other licence categories under the new broadband policy.

READ MORE: MTN Nigeria Secures CBN License for Financial Services

The new licensing framework which comes into force on June 30, seeks to improve the quality of telecommunication services and boost investment in the sector for both existing and new telecoms operators. The other licence categories are: National Public Service Provider, Regional Public Service Provider, National Public Infrastructure Provider and Regional Public Infrastructure Provider.

Until this year, Airtel and Africell have been operating both NPSP and NPIP licences, but under the new structure, they are required to operate either one of the two.