KAMPALA, UGANDA – The plan by MTN Uganda to restructure its mobile money business is facing opposition from a section of shareholders and a service provider, who have now moved to ask for a regulatory check.
According to correspondences seen by this website, the concerned parties are worried that the telecom giant will use the move to cheat shareholders of value, once the mobile money services are divorced from the parent company MTN Uganda, whose shares they acquired on the Uganda Securities Exchange inclusive of the lucrative mobile money business.
The legal red flag, contained in separate correspondences to the Uganda Securities Exchange and Bank of Uganda, comes just days before MTN shareholders meet on July 2 to approve the proposed amalgamation or extinction of MTN Mobile Money (U) Ltd (MTN MoMo)
But former service partner Rural Digital Media Uganda Ltd (RDM), alongside concerned shareholders, in their petition to the Bank of Uganda and the Capital Markets Authority, are demanding that the transaction be halted until full disclosures are made and accountability mechanisms are put in place.
They accuse the telecom giant of trying to mask liabilities, misleading regulators, and sacrificing workers in a bid to sanitise its books ahead of a shareholder vote on a matter.
The petitioners say that the telecom giant orchestrated a calculated scheme to shed liabilities and offload over 400 employees ahead of a corporate reorganisation—without proper disclosure to regulators or investors.
“This was not business reorganisation — this was corporate deceit. MTN Momo knowingly transferred its employment burden to an unsuspecting local partner, then pulled the plug under the guise of a ‘strategic shift’ — all to clean its balance sheet before restructuring,” the June 25 petition by RDM through its lawyers, Reeve Advocates, states.
It is addressed to the Director of National Payment Systems at BoU and copied to the Capital Markets Authority (CMA), and Uganda Securities Exchange (USE).
The petition alleges that MTN offloaded over 400 employees onto RDM shortly before abruptly terminating its contract, exposing the company to Shs5.49 billion (about USD 1.53 million) in liabilities and reputational damage — all while preparing for a corporate overhaul that RDM says was deliberately concealed.
Now, both RDM and MTN shareholders, including investor James Bwambale, are calling on regulators to intervene, citing serious lapses in transparency, labour responsibility, and corporate governance.
Background
In August 2024, RDM entered into an exclusive two-year contract with MTN MoMo to provide merchant quality management services, which the telecom presented as part of its long-term fintech expansion. Based on these assurances, RDM took out loans, expanded its operations, and absorbed over 400 employees previously under MTN’s payroll.
But just three weeks after completing the final staff transfer of a batch of 100 employees, MTN terminated the contract citing a strategic shift.
“The timing was no accident,” the petition states. “MTN’s actions were calculated. They transferred over 400 employees to RDM just in time to sanitise their company in preparation for the upcoming restructuring vote.”
RDM says it was left holding the bag—facing massive payroll obligations, reputational damage, and potential non-compliance with Uganda’s Employment Act regarding collective terminations.
“We were set up,” said an RDM executive, speaking on condition of anonymity. “We became the fall guy in MTN’s clean-up operation.”
Market Integrity in Question
At the heart of the dispute is whether MTN Uganda has breached capital markets rules by failing to disclose the dispute with RDM—and the associated risks—to regulators and shareholders.
“Shareholders are being asked to vote on a transaction that has been strategically cleansed of any pending liabilities,” RDM argues. “This may amount to regulatory misdirection.”
Shareholders also raised concerns in their own petition to CMA. They argue that the EGM notice fails to provide adequate time or information about the full financial implications of the restructuring.
“MTN MoMo will cease to exist with the amalgamation and a new company will be formed,” their letter states. “This leaves shareholders exposed. What are the liabilities—present, future, and contingent—of MTN Uganda? This information has not been made available.”
They want CMA to compel MTN Uganda to furnish a comprehensive report on all liabilities before the EGM vote.
RDM is urging regulators to block or postpone regulatory clearance for the restructuring until its dispute is resolved, compel MTN to disclose the legal dispute and its financial impact to BoU, CMA, and the Uganda Securities Exchange, ensure that any successor company assumes full responsibility for unresolved obligations and establish a liability cushion, such as an escrow account or performance bond, to protect affected workers and RDM.
“This is bigger than MTN and RDM; If left unchecked, this sets a dangerous precedent where licensed companies can restructure their way out of accountability — all while regulators look the other way,” the petition states.
MTN Maintains Silence
BoU and CMA were yet to respond to our queries by presstime.
MTN Uganda has also not publicly responded to the allegations. But in a June 11 cautionary notice to shareholders, the company framed the restructuring as a strategic realignment to improve operational efficiency and regulatory compliance.
But critics say efficiency must not come at the expense of transparency and accountability.
“BoU must act decisively,” the petition warns. “Failing to act rewards bad faith and signals that rules only apply to the small players.”
