Vodacom withdraws from Nigeria

1 Jun 2004

South Africa-based operator Vodacom has announced plans to exit the Nigerian mobile market, after officially taking over the management of what was then Econet Wireless Nigeria (EWN) just two months ago. The operator re-branded EWN under the Vodacom banner around six weeks ago, giving it a foothold in the continent’s largest and most lucrative market, but problems surrounding the brokerage payments by the Lagos, Delta and Akwa Ibom state governments caused it to retreat from the market. Vodacom said that the three state governments had been approached by Oceanic International Bank, Empee Ventures and Bromley Assets Management respectively, which convinced them to make investments in the cellco, but EWN’s former parent, Econet Wireless International, alleged that the payments were bribes. Vodacom has already terminated its agreement with EWN, which included a USD200 million investment. It did not give any reason for the decision to pull out, simply claiming that it had ‘valid grounds’ for ending the deal.

During its short stay in the Nigerian mobile sector, Vodacom/EWN competed with market leader MTN, Nitel GSM and relative newcomer Globacom. The market has seen considerable growth since 2001, with around 3.4 million subscribers at the end of 2003, up from 1.8 million in 2002 and around 400,000 the year before that. At the end of 2003 the then EWN claimed 1.1 million customers, and a market share of 45%.

PriMetrica's Daily Comms Update 1 June 2004