{"id":50,"date":"2011-04-29T14:57:21","date_gmt":"2011-04-29T14:57:21","guid":{"rendered":"https:\/\/new.igihe.com\/the-collapse-of-rwandatel-what-went-wrong\/"},"modified":"2011-04-24T14:22:39","modified_gmt":"2011-04-24T14:22:39","slug":"the-collapse-of-rwandatel-what-went-wrong","status":"publish","type":"post","link":"https:\/\/new.igihe.com\/english\/the-collapse-of-rwandatel-what-went-wrong\/","title":{"rendered":"The collapse of Rwandatel: What went wrong?"},"content":{"rendered":"

The Rwandan Commercial Court recently announced the appointment of a special administrator, Richard Mugisha<\/span>, a prominent Kigali Attorney, to manage the beleaguered Libyan owned telecom, Rwandatel<\/span>. At the request of MTN<\/span> Rwanda, Judge Bwasisi<\/span> Mugabo<\/span> Germain<\/span>, ordered Mugisha<\/span> to assess Rwandatel\u2019s<\/span> financial status, ensure the safety of assets and report back to the court on May 31, 2011 on whether to liquidate the company or try to sustain it.<\/em><\/p>\n

The Rwandan Utility and Regulatory Agency (RURA<\/span>) announced earlier this month [April 5th] that it had permanently revoked the Rwandatel\u2019s<\/span> mobile voice & data license. The Registrar General followed the license revocation by applying for a court order to declare the firm insolvent and appoint the temporary administrator to oversee the firm\u2019s continued fixed line operations and the likely liquidation of assets. Rwandatel\u2019s<\/span> major creditors include Huawei<\/span>, a China based telecommunications equipment provider and MTN<\/span> Rwanda to whom Rwandatel<\/span> has racked up a millions of dollars in debt from interconnection fees for calls made across networks.<\/p>\n

\u201cThe company was mismanaged and their liabilities far outweigh their assets. Their books are negative RWF<\/span> 38 Billion\u201d Rwandan Registrar General Louise Kanyonga<\/span> said Wednesday, \u201cThis has been a real learning experience for our government. We need to ask how this happened.\u201d<\/span> Kanyonga<\/span> said that she did not feel that the action taken by the Rwandan Government would worry other investors. \u201cMany parties have already expressed interest in the license\u201d, she added but was not able to be specific. Others familiar with the Rwandatel<\/span> story feel the handling of the telecom is part of worrisome trend for the region\u2019s ICT landscape.<\/p>\n

In 2004, Greg Wyler<\/span>, a young American IT entrepreneur came to Rwanda and invested millions in his firm, Terracom<\/span>, which attempted to establish a fiber-optic network in mountainous, landlocked country, previously dependent on expensive and unreliable satellite based internet connections. He traversed the countryside in shorts and sandals and was famous for his ambitious attempt to retrofit an aging radio tower atop Mount Karisimbi<\/span>, a 14,787 foot volcanic peak, to create an elevated telecom station bringing voice and broadband internet to the rural masses.<\/p>\n

In 2006, Wyler\u2019s<\/span> group was asked to take control of Rwandatel<\/span>, Rwanda\u2019s sole PTT (Public Telephone & Telegraph) company and\u2014 according to a former Terracom-Rwandatel<\/span> finance executive, who asked not to be named ; Terracom<\/span> bought the asset on very agreeable terms and eventual price of $20 million. It is unclear how much of that price was ever actually paid.<\/p>\n

In 2006, Chris Lundh<\/span>, an American telecom executive with more than 15 years of experience working with African technology companies, was named CEO of the new firm but says that Rwandatel<\/span> was overstaffed and in a financial mess. \u201cWe tried to clean up the place. Much of the technology was quite outdated. We decided to bring in a mobile technology called CDMA (Code Division Multiple Access) which is something that in the States, Verizon and Sprint have used. We built a state of the art CDMA network\u2014both voice and data\u2014and at the time the data services were arguably the best in Africa in terms of internet speed,\u201d Lundh<\/span> said Tuesday.<\/p>\n

Lundh<\/span> told IGIHE.com<\/span> that after their group retrenched redundant employees, repaired Rwandatel\u2019s<\/span> tattered balance sheet and invested heavily in the latest technology, the Rwandan Government wanted the asset back.<\/p>\n

According to the Rwandan News Agency, the new owners had not held to their agreed investment and payment schedule and had fallen short of fiber-optic networking goals.<\/p>\n

In June of 2007, the investors held negotiations with government representatives and accountants to establish the value of the company and agree on a buy-back price. The Americans asked for $40 million. The Government of Rwanda insisted it was worth just $12 million.<\/p>\n

\u201cI remember very well the chairman of RURA<\/span> at the time, Colonel Mudenge<\/span>, approached us. Mudenge<\/span> turned to me on the last day of our negotiation and said : you take this offer or tomorrow I\u2019ll send in the troops. I just laughed. But he repeated himself and the second time around I took him quite seriously.\u201d<\/span> Last July, Col. Mudenge<\/span>\u2014still head of RURA<\/span> at the time\u2014 was arrested after allegedly pulling a gun on a farmer over financial dispute.<\/p>\n

By September 2007 the Libyan investment firm, LAP (Libyan Investment Portfolio) Green, acquired the telecom from Rwanda for several times the price the government had paid just 60 days prior. An initial investment of $100 million and a promise to invest another $177 million over the following 5 years as well as an agreement to meet wireless voice and data roll-out goals gave LAP Green 80% of Rwandatel<\/span>, the remaining 20% stake went the Social Security Fund of Rwanda.<\/p>\n

The wireless voice\u2014or cell-phone\u2014component of Rwandatel<\/span> never quite took off and was easily overwhelmed by competition when, in 2009, the country\u2019s third telecom, Tigo<\/span> Rwanda, began operations behind Rwandatel<\/span> and the wireless voice leader, MTN<\/span> Rwanda. But the wireless data offered by Rwandatel<\/span>\u2014 with its advanced equipment\u2014continued to dominate the market and the other carriers found it difficult to compete. The most recent report from RURA<\/span> on market share shows that Rwandatel<\/span> held 69% of the wireless data market through 2010.<\/p>\n

When asked about the accusations of the former CEO and the discrepancy between the $12 million acquisition and the $100 million dollar sale less than two months later, Rwandan Government officials have been quiet. Regis Gatarayiha<\/span>, the Acting Director of RURA<\/span> says he was not involved with the previous transaction and knows little of it. Loiuse<\/span> Kanyonga<\/span> is also unaware of details surrounding prior transfer. The Ministry in the Office of the President in charge of ICT has not yet responded to inquiries regarding Rwandatel<\/span>.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Rwandan Commercial Court recently announced the appointment of a special administrator, Richard Mugisha, a prominent Kigali Attorney, to manage the beleaguered Libyan owned telecom, Rwandatel. At the request of MTN Rwanda, Judge Bwasisi Mugabo Germain, ordered Mugisha to assess Rwandatel\u2019s financial status, ensure the safety of assets and report back to the court on […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"byline":[277],"hashtag":[],"class_list":["post-50","post","type-post","status-publish","format-standard","hentry","category-news","byline-igihe-com-reporter"],"bylines":[{"id":277,"name":"IGIHE.com Reporter","slug":"igihe-com-reporter","description":"","image":{"id":0,"url":"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&f=y&r=g","alt":"Default avatar","title":"Default avatar","caption":"","mime_type":"image\/jpeg","sizes":[]},"user_id":null}],"contributors":[{"id":277,"name":"IGIHE.com Reporter","slug":"igihe-com-reporter","description":"","image":{"id":0,"url":"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&f=y&r=g","alt":"Default avatar","title":"Default avatar","caption":"","mime_type":"image\/jpeg","sizes":[]},"user_id":null}],"featured_image":null,"_links":{"self":[{"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/posts\/50","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/comments?post=50"}],"version-history":[{"count":0,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/posts\/50\/revisions"}],"wp:attachment":[{"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/media?parent=50"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/categories?post=50"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/tags?post=50"},{"taxonomy":"byline","embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/byline?post=50"},{"taxonomy":"hashtag","embeddable":true,"href":"https:\/\/new.igihe.com\/english\/wp-json\/wp\/v2\/hashtag?post=50"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}