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.
