WASHINGTON, D.C. April 30—The International
Finance Corporation has assisted the Government of Uganda in structuring,
tendering and closing a transaction for the sale of a telecommunications
License to a Second National Operator (SNO). The License covers the
full range of telecommunications services, including fixed lines, cellular
and international service. This transaction is an integral part of
the government’s telecommunications sector liberalization program incorporating
two principal components: privatization of the incumbent carrier; and the
introduction of competition across the broad spectrum of services.
The winning bidder, MTN Uganda -- comprising Mobile Telephone Networks
Limited of South Africa, Telia of Sweden, Ugandan and Rwandan investors
-- narrowly won by bidding US$5.8 million for the License and committing
to roll out at least 89,000 new lines in the first five years of the License
term. Uganda currently has 52,000 fixed lines and approximately 5,000 cellular
subscribers. In its proposal, MTN Uganda plans to invest over $60
million over the first five years, in addition to the up-front payment.
The company expects to begin service in August 1998.
In order to accommodate the government’s objective of rapid expansion
of the telecommunications infrastructure in Uganda, equal weighting was
given to each bidder’s commitments for the size and pace of network development
as well as the bid price.
Mr. Paul Hinchey, Director of IFC Corporate Finance Services Department
called the sale of the SNO License a landmark in Uganda’s economic development.
He noted that the MTN Consortium is committed to more than doubling
Uganda’s stock of phone lines over the next five years, but perhaps as
important, this new competition in the telecom market should improve the
level and quality of service.
IFC, part of the World Bank group, fosters economic growth in the developing
world by financing private sector investments, mobilizing capital in the
international financial markets and providing technical assistance and
advice to governments and businesses.