The Uganda Communications Commission (UCC) has authorised Airtel Uganda to manage the network of cash-strapped K2 Telecom for the next three years.

As a result, 100, 000 K2 Telecom subscribers will be absorbed by Airtel Uganda, the country's second largest operator.

K2 Telecom, one of eight operators in Uganda, was shut down two months ago by the UCC at the order of Uganda Revenue Authority following the operator's failure to pay tax arrears amounting to US$25,000 ((Sh94 million) accrued over 4 years.

The revenue authority said its effort to recover the tax obligation failed as K2 Telecom had repeatedly fallen back on its payment commitments.

UCC head of legal Abdul Salaama Waisswa announced last week Friday that Airtel Uganda was taking over management of K2 Telecom operations.

"All issues to do with network and quality will now be managed by Airtel as of today (July 27) running until 2021," said Waisswa.

Uganda Revenue Authority head of public and corporate affairs Vincent Seruma said the deal between the two operators was not a buyout.

"Before the conclusion of a business sale, all outstanding tax obligations must be cleared first. In this deal nothing of that sort has happened and so it is not a buyout," Seruma said.

According to the UCC, K2 Telecom will have to divulge its sustainability plan going forward, even after resolving the tax issue because it has struggled to sustain its operations due to financial challenges.

Figures released by the regulator indicate that MTN Uganda is the country's largest operator with 11 million customers, followed by Airtel Uganda with 7.5 million subscribers and Uganda Telecom with 2 million subscribers.