Why Africell exited Uganda Market

Africell, a Telecommunication Company that entered Uganda Market in 2014, ended its business on 7th October, 2021. The Drone Media has gathered and established the actual causes of its exit.

Sources have revealed to The Drone Media that the majority shares, 53% belonged to Africell while 47% belonged to Hits Telecom Holding.

Now, the majority shareholders were responsible for the running of day to day business.  Part of the problems was that Africell opted to hire Lebanese experts, who were being paid 10 times compared to Ugandans; this drained the company. Besides, the Lebanese employees/experts were not compatible with the Ugandan market/population.  Most times they would be duped into bad deals thus incessant losses.

However, the main cause was that Africell inherited a problematic company; they bought problems, which had pushed Orange Telecom Uganda into selling it. That is why no other company could risk taking over the inheritance of Africell once it declared it was exiting the market.

It should be remembered that the previous telecom company, Orange Telecom was reportedly going through a nail-biting period amid claims that shareholders were divided over the future of the company.

Orange planned to raise its share capital by more than a thousand fold to help clear a substantial bank loan and fund its 2013 liquidity needs and repay overdrafts amounting to sh38bn among others. Such, according to the report, was on the backdrop of a period of losses posted by the company over the recent years.

A Board of Directors resolution passed at its February 25, 2013 extraordinary meeting reportedly resolved that an extraordinary meeting sits urgently, to consider raising the share capital from sh2.9bn to sh262bn. This was intended to be achieved by creating twenty six million shares of sh10 each, the report indicated.

But, Hits Telecom Holding, Orange’s  minority shareholder,  instead rubbished such rescue moves by claiming Orange was mismanaged beyond repair.

Hits Telecom’s lawyers Byenkya, Kihika and Company Advocates filed a case at the Commercial section of the High Court, instead demanding that Orange’s majority shareholder Atlas Belgium Services and its appointed directors Daniel Delestre, Gerard Ries, Bruno Bourgin, Michel Berre, Oliver Froissart, Philippe Luxcey be held responsible for running down the Telecom company.

Hits also faulted ASB for using its majority shareholding and it’s appointed directors, to award fat contracts to its affiliates, without declaring a conflict of interest, which Hits argued, amounted to a breach of duty of directors to act in good faith.

As it is, the inherited problems continued to haunt Africell. Hits Telecom Holding, which is owned by well placed Ugandan directors, remained in the background. It is believed, Hits Telecom Holding will soon take up the space after all this has settled.