Ugandan court dismisses $1.2m award to cell tower companies against Smile Communications

A Ugandan high court has set aside an arbitral award to American Tower Corporation (ATC) Uganda Limited and Eaton Towers Uganda Limited, two cell tower companies, against Smile Communications Uganda Limited.

The arbitral award was pegged at 5,623,025,394.8  and 954,372,437.77 Ugandan shillings respectively, (about $1,251,916.08).

Smile Communications Uganda Limited, a subsidiary of Smile Telecoms Holdings, a Mauritius-based pan-African telecommunications group, was launched in the country in the fourth quarter of 2009 and pioneered 4G LTE  in the Eastern African region, and voice over LTE (VoLTE) services in Africa.

However, the communications service has been off the grid since January 31, 2022 due to a commercial dispute between the telco and ATC, the tower infrastructure provider since 2018.

Smile accused the tower company of “illegally” disconnecting its network, causing significant damage to its investment in Uganda, and costing the business $120 million.

The telco also alleged discriminatory pricing practices, with unfair and illegal power billing under which ATC was collecting around 50 percent more than permitted.

The disputes, referred to arbitration, were extended in 2022 with a ruling that favoured ATC.

In an award handed down on January 28, 2022, the arbitrator dismissed all of Smile’s claims and found in favour of the tower companies on all heads of the counter-claims raised.

The arbitrator ordered Smile to pay the billed outstanding sums of $297,721.79 as well as the unbilled amounts due to the expiry of leases on 25 sites amounting to $854,194.29.

Smile was also ordered to pay $100,000 in general damages for breach of contract as well as the costs for the counter-claim.

However, the telco challenged the ruling and applied to the high court to set aside the arbitral award.

In an April 11 ruling, Stephen Mubiru, the presiding judge, granted Smile’s application and set aside the award, citing delays in the issuing of the award and concerns about the arbitrator’s partiality.

“The award is bad in law and contrary to the agreed terms by which the parties, as well as the arbitrator, are bound, it having been handed down by the arbitrator after effluxion of the greed period, and it is also vitiated by a reasonable apprehension of partiality on the part of the arbitrator,” Mubiru said.

“For these two reasons, the award is hereby set aside with costs to the applicant, Smile Communications.”

ATC did not appeal the ruling.