Stiff competition and high indebtedness have forced Uganda's third-largest telecom service company by subscriber base, Africell, to quit the country.
The company says its services will stop on October 7, this year, according to a letter circulated to its employees, who will continue to be in employment until November 30.
Africell Uganda says its vision was to be a leader in mobile services and making an impact in digital transformation of society. The statement says that the stiff competition has made it difficult to achieve its business objectives, hence the decision to quit.
“In Uganda – a country with a mature and competitive telecom sector – we believe that the opportunity to achieve this impact is increasingly limited. We have therefore taken the difficult decision to permanently end Africell Ug’s operations in Uganda,” the statement says.
The Lebanon-based Africell Holdings, entered the Ugandan market in 2014 by acquiring Orange Uganda, and has been mostly known for its affordable internet service packages, and relative network stability.
The minister for Finance, Planning and Economic Development, Matia Kasaija says it is sad that foreign companies are exiting the Ugandan market at this time, saying distressed companies should instead approach the government for advice or help before taking such a decision.
Kasaija says companies that quit Uganda in times of economic hardships, lose their credibility as far as being a partner in economic development is concerned. Kasaija says Uganda is not the only economy affected by the hard operating environment.
"Yes, I'm concerned because they have been working with us and they have been employing our people. So when they go, of course, we lose jobs, so definitely am sad. That is why I'm saying please don't go, stay. Stay, we can work out some mechanism that can allow you to survive as the economy begins to pick up. I'm not happy because even where they are going things are not easy - America and Europe are equally struggling. Going away because the economy is bad and returning only when the economy is doing well shows that they are not committed to building our nation." Kasaija said.
The Uganda Communications Commission (UCC) last year rated Africell 'top performer' in terms of service delivery. Earlier in August, Smart Telecom also announced it was leaving the country after failing to realise its business objectives.
The management noted that their decision to quit will have a long-term impact on the telecommunication sector in Uganda, but an immediate impact on the employees.
The employees have been offered severance pay, payment for unused annual leave, repatriation pay for those eligible to it, as well as full salary and benefits during the rest of the employment period. The company says its decision is aimed at enabling it to focus on other opportunities “for social and commercial impact”.
In 2019, the company was reported to be indebted to the tune of Shs 250 billion, while it made a loss of more than Shs 1.5 trillion. Part of the debt was been inherited from Orange when it purchased it.
In the same year, Ziad Daoud was named chief executive in efforts to stabilize the company. He resigned in March 2021 to be replaced by Houssam Jaber.
The letter to the staff says that starting now, they will no longer accept new customers, while the remaining period will help the existing ones migrate to other networks. Africell's exit comes after the exit of international chain supermarkets; Nakumatt, Uchumi, and Shoprite after finding it tough in the country.