Econet’s persistence paying off as it homes in on V-Mobile Nigeria

20 Jul 2004

Zimbabwe-based Econet Wireless International (EWI) says it is ready to table a USD230 million offer for a 50% + one majority share stake in beleaguered Nigerian mobile operator V-Mobile, just months after it lost its 5% holding in the company, had its management contract terminated, and saw control handed to South Africa-based rival Vodacom. In an interview with the This Day newspaper, EWI chief executive Strive Masiyiwa said that his company was hopeful that an international tribunal established by the UN agency on trade disputes would strike a line through the last year of deliberations and effectively return V-Mobile to its position as at 29 June 2003. Subject to such a ruling, EWI would then exercise its preemptive rights over the failed Vodacom bid and move to pay for the 50% + one majority share offered to the South African operator.

In 2003 EWI presented the V-Mobile board (then known as Econet Wireless Nigeria, EWN) a USD150 million offer for a 33% stake in the venture and, according to Masiyiwa, the offer was accepted. However, some members of the EWN board then decided to sever ties with EWI and instead offer a majority holding to Vodacom. Following months of delays in which EWI launched an arbitration case against the decision, the South African company duly signed a five-year management deal in April this year. However, in a further unexpected twist to the story, two months later the two sides ended their contract – apparently by mutual consent – with Vodacom citing ‘irregularities’ in the payment of brokerage fees. The announcement prompted an investigation from Nigeria’s primary anti-corruption agency, the Economic and Financial Crimes Commission (EFCC), to probe the failed business deal, although Vodacom claimed not to have been informed of the development. The EFCC said it planned to assess to what degree transparency and corporate government have been compromised in the relationship between the two. At the time the news of the investigation was welcomed by Strive Masiyiwa who said that he was ‘delighted to learn that action is being taken by the Nigerian government to investigate corrupt business practices and disclose any unethical dealings’.