Vodafone Uganda Files for Bankruptcy

The Vodafone brand has taken a knock with the news that Vodafone Uganda has filed for bankruptcy protection and appointed administrators as it struggles to remain in business.

The operator, owned and run by the Afrimax Group that licenses the Vodafone brand to offer services in Uganda, has run into financial difficulties and filed for protection against its creditors.

Vodafone Uganda tried to build a business by focusing on 4G-enabled mobile data services, but with competition tough in the Ugandan market it has struggled to make inroads and announced that it will be "embarking on a new strategy that will involve a significant realignment of its commercial focus and operational model," for which it has needed to appoint an administrator to restructure the business. "The appointment of a Provisional Administrator is a standard business practice that aims to improve the fortunes of a company facing financial or administrative challenges," it added.

And the bad news doesn't end there for the operator. Having already experienced service disruptions towards the end of last year and early in 2018, Vodafone Uganda issued a note to its customers saying that they are likely to "experience a temporary deterioration in the quality of our network services as the Administrator implements the required changes and negotiates with suppliers. We apologise in advance for any disturbances and inconveniences caused and reassure all customers that any unused data will be reimbursed once our network is fully restored. We will keep customers updated on all progress as and when our services are restored."

The signs are not hopeful for the long-term survival of the operator. According to the latest statistics from research house Ovum, the six operators in Uganda between them have almost 23 million customers, but the market is dominated by clear leaders MTN and Airtel, which between them have more than 19.5 million customers (equivalent to 86% of the market). Vodafone Uganda, by contrast, has a market share of just 1.6% and lost market share and customers in the final quarter of 2017.

It seems likely the market will soon have fewer service providers.

— Ray Le Maistre, Editor-in-Chief, Light Reading for Connecting Africa.