MTN Uganda loses USD14.4 million license case against regulator

Telecom firm, MTN Uganda Limited has lost a High Court legal battle in which it was challenging the payment of $14, 140,030 (about Shs50billion) as license fees for the three-year transitional period.

MTN Uganda had been challenging the payment of a licence fee of $14,140,030 for the transitional period October 21 2018 to  June 30 2020, after its license had expired pending renewal.

Through its lawyers, Sebalu & Lule Advocates, MTN Uganda Limited, had asked the court to declare that any licence fee for the transition period should be determined with reference to the company’s Second National Operator (SNO) licence.’

But UCC in a letter dated July 22 2020, directed MTN to pay a licence fee for the transitional period October 21 2018 to June 30 2020 worth US $14,140,030.

In their suit against UCC, the telecom company unsuccessfully argued that at the time of the demand for transition license fees, no legal or regulatory framework for determination of fees for the transition period existed.

Justice Musa Ssekaana agreed with UCC’s pleadings and held that there was no procedural impropriety in the UCC decision while imposing transition fees based on a pro-rated assessment and that the same was fairly arrived at and guided by the amount paid for of US$100,000,000 in the currently renewed license.

“It has been shown that the UCC arrived at the amount payable as transition fees in the fairest manner and no reasonable person would think otherwise. Otherwise any amount beyond what was agreed and paid for in the (National Operator) NTO licence would have been challenged as being excessive and using the figure originally paid in Second National Operator (SNO) licence in 1998 would have been irrational since it would be extremely low,” he ruled on Friday, April 23rd 2021.

The judge reasoned that UCC has specialized knowledge of the telecommunications sector and hence it applied its knowledge in arriving at the decision whereby it would not be rational for the court to substitute its decision with another decision.

Court heard that the determination and charging of license fees is one of the operational administrative powers exercisable by the Respondent under sections 5 (1)(a)(b) and (z) and 6 of the Uganda Communications Act 2013.

The court observed that Regulation 3(n) of the Uganda Communications (Licensing) Regulations, S.I. No. 95 of 2019 were in effect before the decisions on the amount of fees payable by the MTN were made.

“It is accordingly untenable for the Applicant to argue that there is no legal framework and no law under which the fees were levied. There is no requirement in the law that provides that the actual amount payable shall be determined by way of a statutory instrument,” Justice Ssekaana held.

Justice Ssekaana further reasoned that at all material times during the transitional period when MTN’s operations were being temporarily extended, the company was fully aware that the appropriate licence fee for the extensions would have to be paid at a later date because this was an express provision in the authorizations which it accepted.

“It is disingenuous to now turn around and argue that the fee is illegal because it is retrospectively being applied. There is no law that prevents payment or ascertainment of payment in arrears for a licensed one has used for private gain. If the Applicant did not want to pay fees after consuming a service it should have declined the extensions,” the judge said.

According to the court decision, the telecom giant had asked the court to issue an order quashing the decision of UCC requiring MTN to pay $14,140,030 as licence fees for the transition period without any legal justification.

The company had also sought an order restraining UCC from implementing its decision and in any way interfering with or interrupting MTN’s operations by reason of its decision and also to prohibit the Respondent from unilaterally determining and levying the licence fees for the transition period which are not prescribed by law.

Barnabas Tumusingize of Sebalu & Lule Advocates represented MTN while Edwin Karugire of K&K Advocates represented UCC.


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