MTN Uganda fined USh2.3 billion for breach of contract with EzeeMoney

by | Nov 19, 2015

NCC postponement of MTN’s deadline would seem to appear as a respite for the giant Telco owing to its failure to disconnect unregistered subscribers from its network. However, more trouble looms for the company as the Ugandan commercial court has ordered MTN Uganda to pay the sum of USh2.3 billion (about $662,000) in damages to EzeeMoney Ltd for sabotaging its business.

The latest fine on the MTN Uganda started when MTN Uganda failed to follow up on an earlier contract allowing EzeeMoney, which runs an e-money business to provide digital transmission [E1] and 30 fixed telephone lines to carry out its mobile money business.

Acting on the earlier contract, EzeeMoney went on to contract Yo! Uganda Limited (YUL) to implement the service after Uganda Communications Commission, the regulator approved it on December 2012 to use the 7711 short code to enable its customers subscribe for e-money services.

But in 2013, MTN cancelled the contract, saying EzeeMoney was a direct competitor to its mobile money business. Through AF Mpanga and company advocates, EzeeMoney went to court saying MTN’s action “restricted and distorted competition”.

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EzeeMoney said that MTN also damaged its ties with YUL and deprived it of services of other telecommunications operators. It argued that MTN used its exclusivity agreements to stop its agents from working for any other firm with similar business, further limiting competition.

In a January 28, 2013 letter to EzeeMoney, MTN appeared to say its business would be disrupted if the former was given access to its platform.

“EzeeMoney is in direct competition with MTN in the provision of mobile money,” read the letter in part.

Justice Adonyo said the letter confirmed that MTN was stopping services of the company because it considered it a competitor. He also said MTN should pay USh800 million to EzeeMoney in general damages for loss of business.

“It is testified that when YUL required the defendant (MTN) to activate the plaintiff’s (EzeeMoney) short code on its platform, the defendant declined to do so on the basis that the plaintiff was in direct competition with it,” the judge observed.

“YUL then seeing that the plaintiff couldn’t carry out the business they had agreed together, by a letter dated 7-2-2013, did terminate all services with the plaintiff as YUL did not want to jeopardize its relationship with the defendant.”

The judge also found that MTN coerced its agents to reject EzeeMoney. One witness, Sammy Mwathi told the court that he was an MTN money agent and he was restricted from dealing with other firms in the same business by signing exclusivity agreement.

On that account the judge went on with his judgment to ensure a payment of USh1.5 billion in punitive damages to deter not only MTN but also warn other companies against uncompetitive business tactics.

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Ifeanyi Ndiomewese
Ifeanyi Ndiomewese

Ifeanyi is a desk reporter-turned administrator. Outside of work, I love to read and travel.

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