Vodafone has agreed to invest USD250 million into Vodacom International Holding (VIH), a subsidiary of South Africa’s Vodacom, in which the British cellco owns 35%. The cash injection will help VIH fund the acquisition of a majority stake in Econet Wireless Nigeria, which was given board approval last week. Under a shareholder’s agreement made at the time Vodacom was formed, VIH is not permitted to pursue business opportunities north of the equator. When the opportunity in Nigeria arose, Vodacom asked Vodafone to waive the provision. The British company initially refused, adding that it would prefer to pursue the deal directly. However the company quickly revised its stance, subsequently agreeing to jointly purchase Econet Wireless Nigeria with VIH for USD230 million.
The sale of Econet Wireless Nigeria is expected to be protracted due to a number of legal battles. Econet Wireless International (EWI), a 5% stakeholder in the Nigerian operation, went to court last week claiming that the EGM which approved an offer by Vodacom to buy a 50% stake in Econet Wireless Nigeria was ‘irregular’ because it took place without proper notice being given to all shareholders. EWI subsequently applied for the agreement to be nullified, a matter which is still before a Nigerian court. Another Econet Wireless Nigeria shareholder, the First Bank of Nigeria, has also gone to court to enforce its right to convert loans into equity, which if permitted would give it a 20% stake. A decision is still pending.