MTN Uganda to Pay Shs 11.3 Billion for Unfair Competition and Contract Breach
In a landmark ruling delivered on April 21, 2025, the Commercial Division of Uganda’s High Court has directed MTN Uganda to pay VAS Garage Limited more than Shs 11.3 billion in compensation. The judgment, handed down by Justice Stephen Mubiru, found MTN guilty of contract breach, unfair competition, and misuse of proprietary data.
Origins of the Dispute
The conflict dates back to 2014, when VAS Garage signed a Content Provision Agreement (CPA) with MTN Uganda. Under this agreement, VAS Garage supplied mobile content via UCC-approved shortcodes, while MTN was responsible for billing and sharing 40% of the revenue with the content provider.
VAS Garage invested over Shs 300 million in content delivery infrastructure and promotional campaigns and built a dedicated database of MTN users who opted into their services.
However, in 2015, MTN deleted the subscription database, citing a UCC directive aimed at implementing a “Do Not Disturb” (DND) feature to curb unsolicited messages. Justice Mubiru, citing a 2018 UCC ruling, said MTN’s actions were unauthorized and violated the contractual agreement.
Court’s Findings Against MTN
The court established that VAS Garage had legitimate commercial interests in the database and that MTN acted beyond its mandate in terminating access. Justice Mubiru ruled that MTN used its dominant market position to oust VAS Garage while continuing to operate its own value-added service, MTN Play, under more favorable conditions.
“The defendant misused its dominant position as the custodian of the plaintiff’s keywords and databases to unfairly drive the plaintiff out of business,” the judge stated.
MTN’s argument that the issue had been resolved by the Uganda Communications Commission was dismissed, with the court asserting that the UCC lacks authority to issue financial compensation.
Compensation Breakdown
The High Court awarded:
- Shs 1.26 billion in interest on unpaid invoices
- Shs 300 million in marketing expenses
- Shs 8.37 billion in lost income over 29 months
- Shs 1.39 billion in general damages for conversion and unfair competition
Interest on all amounts was set at 19% per annum, accruing from the judgment date until full payment, along with the full legal costs of the suit.
Industry Impact
This ruling is seen as a milestone in protecting third-party digital service providers in Uganda’s telecom space. It reinforces limitations on how dominant telecom operators can control or exploit data that does not solely belong to them.
As of publication, MTN Uganda has not issued an official response to the court decision.