Vodacom Econet bid challenged by Econet!

24 Oct 2003

Vodacom South Africa’s audacious bid to enter the potentially lucrative Nigerian mobile market through the acquisition of a stake in Econet Wireless Nigeria (EWN) has run into trouble following the announcement that Econet Wireless International – a current stakeholder in EWN – plans to launch a legal challenge to stop the deal going ahead. EWI claims that, as an existing shareholder in the cellco, it has pre-emptive rights to up its stake in EWN and alleges that Vodacom’s actions effectively ‘induce a breach of contract’. EWI insists that it made a bid for the equity prior to Vodacom’s involvement and, indeed, had its offer accepted being being afforded a 60-day period of exclusivity in which to complete the deal. However, Vodacom is accused of trying to scupper EWI’s bid by illegally approaching EWN’s board to express an interest and then tabling a counter bid – and one which matches EWI’s dollar for dollar – even though Vodacom’s deputy CEO Andrew Mthembu was warned off by being reminded that EWI had pre-emptive rights. EWI hopes that a legal victory will afford it financial compensation to cover losses incurred as a result of delays and the damage caused to its brand name. The case continues.