Uganda Telecommunications Corporation Limited (UTel) is poised for a significant transformation, as it is set to receive a substantial $225 million investment fund from the global engineering and construction contractor, Rowad Capital Commercial (RCC) LLC. This investment marks a pivotal moment in the telecom provider’s journey, following a period of financial difficulties that culminated in the company being placed under court-appointed administration in November 2022.
Earlier this year, RCC officials and Uganda’s President Yoweri Museveni held a series of extensive meetings and negotiations to lay the groundwork for this investment. These high-level discussions underscored the strategic importance of revitalizing UTel, not only for its operational sustainability but also for its potential to contribute to Uganda’s broader economic and technological growth.
Uganda established UTel as its national telecom provider on April 8, 2021, envisioning it as a key player in the country’s telecommunications sector. However, less than two years later, the company faced severe financial challenges that forced it to relinquish all its assets and business operations. The financial strain led to its placement under court-appointed administration, raising concerns about the future of the state-run telco.
The Ministry of Finance and the Ministry of Information and Communications Technology currently share ownership of UTel, reflecting its status as a state-run entity. However, the recent agreement to cede 60% of its shares to the Dubai-based Rowad Capital marks a significant shift in its ownership structure and strategic direction. This move injects much-needed capital and expertise into the company, positioning it for a more competitive stance in Uganda’s telecom market.
Rowad will invest $225 million to boost UTel’s operational capabilities and enhance its competitive edge in the market. They will direct the funds towards upgrading infrastructure, expanding service offerings, and implementing cutting-edge technologies that will enable UTel to better serve its customer base and compete with established players in the industry.
This investment will drive a broader strategy to revamp Uganda’s telecom industry, challenging the dominance of major players like MTN Uganda and Airtel Uganda. By inviting foreign investment, Uganda aims to not only improve the operational efficiency of its national telecom provider but also to attract international expertise and innovation that align with the country’s regulatory framework and developmental goals.
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To comply with regulatory requirements, UTel must list at least 20% of its shares on the Uganda Stock Exchange within two years. This mandate ensures transparency, accountability, and public participation in the company’s operations. The listing will also provide an opportunity for Ugandan citizens and institutional investors to own a stake in the company, further integrating UTel into the fabric of the national economy.
The move to list on the stock exchange aligns with the practices of other major telecom operators in Uganda, such as MTN Uganda and Airtel Uganda, which have already listed their shares. This step enhances UTel’s credibility and financial stability while increasing its visibility in the market.
The partnership between UTel and Rowad Capital is not just about financial investment; it also represents a transfer of knowledge and expertise that will be crucial in navigating the challenges of the telecom industry. Rowad brings its global experience in engineering and construction to develop UTel’s infrastructure and services, ensuring the company meets the demands of a rapidly evolving market.
