A Nigerian newspaper is reporting that MTC Kuwait has agreed to buy a 65% stake in Vee Networks, which trades under the brand name Vmobile. The deal was reportedly struck yesterday in London, with MTC having 30 days from 17 April to pay for the stake. The news has not yet been confirmed by either MTC or Vmobile.
According to TeleGeography’s GlobalComms database, Vmobile is the third largest mobile operator in Nigeria by subscribers, launching its GSM network on 6 August 2001. The company has struggled in recent years as a result of intense competition and an ongoing battle for management control that has threatened to break into a full-scale boardroom war on numerous occasions. The company was originally founded as Econet Wireless Nigeria (EWN) in 2001, named after the South African-based mobile holding company Econet Wireless International (EWI) which held a 5% stake. EWI had a management contract to run EWN and in early 2003 attempted to increase its stake to 33%. However, its bid was rejected by the EWN board in favour of a USD150 million offer made by Vodacom of South Africa. The deal was put on hold for the rest of the year as EWI launched legal proceedings against the EWN board and Vodacom, claiming that it was granted exclusive rights to the stake in an agreement signed when EWN was first founded. Vodacom failed to take a holding in EWN but was placated by a five-year contract to manage the operator, granted against EWI’s wishes in April 2004, with the promise of a 50% plus one share equity investment once all the ongoing legal issues had been resolved. As part of the deal Vodacom agreed to provide a loan to fund network improvements until an injection of capital could be made. Two weeks later EWN was renamed Vee Networks and its brand name changed to Vodacom.
But EWI was still not happy: it had neither management control, nor the equity it wanted. It began making claims of corruption against EWN’s other shareholders, centring on ‘brokerage payments’ made to private Nigerian companies by EWN to secure the investment of the state governments of Lagos, Delta and Akwa Ibom. EWI said the payments — thought to total around NGN550 million — amounted to bribes. Barely six weeks after taking over the cellco and under pressure from its parents Telkom SA and Vodafone, Vodacom pulled out of its contract and walked away from Vee Networks, citing ‘irregularities’ in the payment of the brokerage fees. Management of the company was handed to Dr Gamaliel Onosode, of the Delta State Ministry of Finance, and services were hastily rebranded under the Vmobile banner.