Airtel, MTN fend off Ugandan regulator’s intrusion into $12bn Mobile Money revenue

Currently, there is a war brewing in Uganda between the mobile network operators and Uganda Communications Commissions (UCC), the Uganda Police Force, and State House. This dispute emanated as a result of the agencies interests in monitoring the Shs44 trillion ($11.79 billion) mobile money business.

Since the inception of telecommunication in Uganda, there has been no form of regulation by the necessary agencies and telecoms operators have been doing self-declaration to the regulators. However, since the entry of mobile money services, cybersecurity and terrorism, there is need to implement roles for the security agents and other controls. UCC also directed that telecoms should grant the Uganda Police access to their Mobile Money operations data.

Ugandan President, Yoweri Museveni, last year set up a multi-billion technology called Intelligence Network Monitoring System (INMS)  in order to get full access to the telecom data system. This system is expected to monitor only the voice and data aspect of the telecom system but the government agencies are trying to pry into mobile money, which is the cash cow of the industry. The telecoms operators led by MTN and Airtel are protesting to defend their business secrecy.

According to the independent, in a letter dated November 13, Airtel Uganda noted that from section 5(1) (u) of the UCC Act, the obligation and function to establish an INMS lies exclusively with the UCC and not the Uganda Police or any other department/agency of the Government of Uganda.

“We are not aware of any amendment to this provision or any other law or regulation that provides for INMS for Uganda Police,” notes V.G Somasekhar, the Airtel Executive Director in a letter to UCC.

Airtel also noted that mobile money services are regulated by the Bank of Uganda under a different law and as such does not fall within the category of services that should be monitored by UCC through the INMS created pursuant to section 5(1) (u) of the Uganda Communications Act, 2013.

Airtel further said that  it would await the requisite Memorandum of Understanding (MoU) among others, which would define the technical requirements for UCC’s INMS; the parameters to be monitored by UCC through the INMS; the scope of information to be accessed by UCC through the INMS and the commercial terms in respect of Airtel’s resources that will be used by the UCC for the INMS and other related matters.

Insiders say MTN also raised some objections but was not as assertive as Airtel Uganda. They also suspect the telecom giant is not keen to stir up a storm with the government at a time when it is looking to get a renewal of its concession, which expires this year.

Apart from its security features, the technology was also expected to put an end to suspected under-declaration of revenue by the telecoms.

At the height of the MTN mobile money scandal, it was alleged that the operator had been under-declaring the volumes of its Mobile Money platform. Apparently, MTN was reportedly making Shs14 billion a day but was declaring Shs9 billion.

The independent further reported that UCC collects an annual levy on telecoms gross revenue of 2 percent. The levy is too critical, it constituted 27 percent of the Commission’s projected revenues in the financial year 2014/2015. And UCC is required to remit 1 percent of the operators’ levy to the Consolidated Fund.

However, in a 2015 report published this year, the Auditor General of Uganda, John Muwanga, added his voice to those that have raised as a red flag, the fact that the regulator relies on the operators audited financial statements to raise invoices of the 2 percent levy on the revenue.

“A review of the revenue collection system revealed that the Commission has not yet built capacity to independently verify the revenue figures reflected in the operators audited financial statements to counter the likelihood of audit risk/ or collusion. As such, there is a risk of under-collecting revenue for the Commission in the circumstance,” the report reads.