Econet confident of recovering controlling stake of Nigeria

5 Mar 2007

CEO of South African firm Econet Wireless Group (EWG) Strive Masiyiwa has said that he is confident that his company will win a court ruling to reverse the May 2006 sale of 65% of Nigerian cellco V-Mobile to the pan-African Celtel group. Two separate hearings are currently before the Nigerian courts, which if ruled in Econet’s favour will result in the setting aside of the USD1.005 billion deal. EWG claims that it was granted exclusive rights to the stake in the cellco when it was first set up in 2001 as Econet Wireless Networks (EWN). EWG retains the 5% stake it has always had, but attempts to increase its holding to 33% in early 2003 were frustrated by the board of EWN, who preferred a bid from rival South African firm Vodacom. Vodacom held off the purchase while EWG launched legal proceedings, but was convinced by EWN to invest in April 2004 with the award of a five-year management contract and the sweetener of a 50% plus one share holding ‘once legal issues were resolved’. Vodacom provided a loan to EWN for network improvements and the network was renamed Vee Mobile. EWG cried foul, claiming the whole affair was riddled with corruption. Six weeks later Vodacom walked away, citing ‘irregularities’ in broker payments, and the cellco’s management was handed to the State Ministry of Finance. The network was quickly rebranded as V-Mobile. After the purchase of the network by Celtel, and subsequent rebranding to Celtel Nigeria, EWG once again claimed it had been shut out, and launched new legal proceedings. ‘This is a straightforward legal case,’ said Masiyiwa. ‘If an irregularity occurred…(regardless of subsequent investment in the network)…then the sale must be reversed. It’s as simple as that.’ According to TeleGeography’s GlobalComms database, Celtel Nigeria had just under six million subscribers at the end of September 2006, giving it a market share of 24.1%.

Nigeria, Airtel Nigeria, Vodacom Group