HOW MTN FLOORED UTL TO REAP USHS 6BN
HOW MTN FLOORED UTL TO REAP USHS 6BN
The business relations between telecom rivals; MTN Uganda and Uganda Telecom Limited (UTL) are likely to worsen after Court of Appeal ordered the latter to pay Ushs6bn to the former as in telconnection fees recently.
The ruling was reached by three Justices; Remmy Kasule, Rubby Aweri Opio and Richard Buteera.
According to Court documents, in February 2008, MTN invoiced UTL for Ushs6bn as interconnection fees, but UTL only paid Ushs3.4bn contending that the balance was not due to them, leading to the Court case where both parties failed to agree on who was responsible for paying the remaining balance that arose due to the traffic resulting from code sharing.
In the first ruling in the High Court, MTN defeated UTL, but the latter was not content with Justice Geoffrey Kiryabwire’s ruling resulting into the appeal case. MTN, through their lawyers, Kampala Associated Advocates, argued that the said money arose as a result of applying the domestic rate of Ushs100 to the telephone traffic exchange between UTL and MTN for “telephone traffic originating from and terminating on code +2566477 xxxx that UTL had agreed to share with Gemtel which was operating in South Sudan”.
However, Court of Appeal faulted Eng. John Nasasira, the Minister of Information and Communications Technology for allowing the Uganda telecom companies to share codes with South Sudan’s Gemtel Limited without providing guidelines on how issues of traffic and the reconnections were to be handle.
Contents in contract
MTN and UTL, according to Court documents, entered into an interconnecting agreement effective February 1, 2001 through which the two firms were obliged to pay each other interconnection fees for traffic terminating in each other’s network, or originating from one’s network and transiting the other’s network.
It is said Gemtel which had received a license to offer telecommunications services in South Sudan approached UTL in partnership to share a Country code.
This was due to the fact that South Sudan at the time was in the process of procuring an assignment of a telecommunication Country Code from the International Telecommunications Union (KU). This led to the initiation of negotiations between the responsible Ministers of Southern Sudan and Uganda. The negotiations eventually resulted into permission by UTL for Gemtel to utilise the code +256 477, a code of UTL normally reserved for Northern towns of Arua, Gulu, Lira and Southern Sudan. The code +256 477 xxx, according to the contract meant that UTL – Gemtel had become on company, thus making it part and parcel of the numbering assets of the appellant (UTL) allocated to it by the Uganda Communication Commission (UCC).
This was further highlighted by the expert witness PWZ who described this partnership in her evidence stating that, “He (UTL) is not just allocating to Gemtel as part of his network, and in telephoning we call it homing”. PWZ described the network as the “same for both”. The code that UTL allowed Gemtel to use was local.
In a judgment reached unanimously by both justices, it was found that the first judge hadn’t erred stating that, “Gemtel had no network outside that of UTL and without the Code +256 477 xxx which was a local code for Ugandan purposes, Gemtel code could not operate. As found earlier this was an ad hoc arrangement of a temporary nature that has been sanctioned by the Minister of Uganda. Everything technical about the said arrangement was Uganda and I accordingly so find. Considering the evidence on record, we find that the learned trial judge was justified in reaching the conclusion he did reach”.